If you are salaried in Pakistan, your employer deducts income tax from your pay every month before the money reaches your account. Most people never check that figure. They should: the slabs changed again in the Finance Act 2026, and for anyone earning more than about Rs 183,000 a month the deduction for 2026-27 is lower than it was last year.
This guide explains how the salaried slabs for tax year 2027 (1 July 2026 to 30 June 2027) work, walks through three full calculations, shows how much the new budget changes your take-home pay, and lists the mistakes we see most often when people try to check their own payslip.
The basics: tax year, taxable salary and who deducts it
Pakistan’s tax year runs from 1 July to 30 June. The year starting 1 July 2026 is called tax year 2027, and it is the one people usually describe as FY 2026-27. The rates for salaried individuals sit in Division I, Part I of the First Schedule to the Income Tax Ordinance, 2001, and the FBR publishes them each year in its Withholding Tax Rates Card for Tax Year 2027.
Three points matter before you touch any numbers:
- The slabs apply to annual taxable salary. Your employer estimates what you will earn in the whole year, works out the annual tax, and spreads it across your remaining pay months under section 149.
- Taxable salary is not always your gross pay. Basic pay, house rent allowance, bonuses and most other allowances are taxable. A few items, such as medical allowance up to 10% of basic salary where no free medical treatment or reimbursement is given, can be exempt.
- The salaried slabs only apply if salary is more than 75% of your taxable income. If most of your income comes from business, freelancing or rent, the non-salaried rates apply instead. Freelancers exporting IT services have their own regime, covered in our freelancer tax guide.
Salary tax slabs for 2026-27 (tax year 2027)
Each slab has a fixed amount plus a percentage of the income above the slab’s starting point. You only ever use one row: the one your annual taxable salary falls into.
| Annual taxable salary (Rs) | Tax |
|---|---|
| Up to 600,000 | 0 |
| 600,001 – 1,200,000 | 1% of the amount above 600,000 |
| 1,200,001 – 2,200,000 | 6,000 + 11% of the amount above 1,200,000 |
| 2,200,001 – 3,200,000 | 116,000 + 20% of the amount above 2,200,000 |
| 3,200,001 – 4,100,000 | 316,000 + 25% of the amount above 3,200,000 |
| 4,100,001 – 5,600,000 | 541,000 + 29% of the amount above 4,100,000 |
| 5,600,001 – 7,000,000 | 976,000 + 32% of the amount above 5,600,000 |
| Above 7,000,000 | 1,424,000 + 35% of the amount above 7,000,000 |
The fixed amounts are not arbitrary. Rs 116,000, for example, is exactly the tax on Rs 2,200,000 under the slabs below it (Rs 6,000 + 11% of Rs 1,000,000). That is why the system is smooth: moving one rupee into a higher slab only adds the higher rate to that one rupee.
What changed from 2025-26
The bottom three slabs are untouched. The cuts are all above Rs 2.2 million a year, and the 9% surcharge on salaried income above Rs 10 million has been withdrawn.
| Income band (Rs) | 2025-26 rate | 2026-27 rate |
|---|---|---|
| 600,001 – 1,200,000 | 1% | 1% |
| 1,200,001 – 2,200,000 | 11% | 11% |
| 2,200,001 – 3,200,000 | 23% | 20% |
| 3,200,001 – 4,100,000 | 30% | 25% |
| 4,100,001 – 5,600,000 | 35% | 29% |
| 5,600,001 – 7,000,000 | 35% | 32% |
| Above 7,000,000 | 35% | 35% |
| Surcharge (income above Rs 10M) | 9% of tax | None on salary |
How to calculate your own tax in four steps
- Add up your taxable monthly pay (basic plus taxable allowances) and multiply by 12. Add any bonus you expect.
- Find the slab that annual figure falls into.
- Subtract the slab’s starting point, multiply the excess by the slab rate, and add the fixed amount.
- Divide by 12 for the monthly deduction. Take that from your monthly pay to get take-home pay.
Worked examples
Example 1: Rs 150,000 a month
Annual salary is 150,000 × 12 = Rs 1,800,000, which sits in the Rs 1.2–2.2 million slab.
- Excess over Rs 1,200,000: Rs 600,000
- 11% of Rs 600,000 = Rs 66,000
- Tax = Rs 6,000 + Rs 66,000 = Rs 72,000 a year, or Rs 6,000 a month
- Take-home: Rs 144,000 a month; effective rate 4%
Because this salary is below Rs 2.2 million, the 2026-27 budget does not change it at all.
Example 2: Rs 300,000 a month
Annual salary is Rs 3,600,000, which falls in the Rs 3.2–4.1 million slab.
- Excess over Rs 3,200,000: Rs 400,000
- 25% of Rs 400,000 = Rs 100,000
- Tax = Rs 316,000 + Rs 100,000 = Rs 416,000 a year, about Rs 34,667 a month
- Take-home: about Rs 265,333 a month; effective rate 11.56%
Under the 2025-26 slabs the same salary paid Rs 346,000 + 30% of Rs 400,000 = Rs 466,000. The new slabs save Rs 50,000 a year, roughly Rs 4,167 a month.
Example 3: Rs 1,000,000 a month (with the old surcharge)
Annual salary is Rs 12,000,000, in the top slab.
- 2026-27: Rs 1,424,000 + 35% of Rs 5,000,000 = Rs 3,174,000 (Rs 264,500 a month)
- 2025-26: Rs 616,000 + 35% of Rs 7,900,000 = Rs 3,381,000, plus the 9% surcharge (Rs 304,290) = Rs 3,685,290
- Saving in 2026-27: Rs 511,290 a year; take-home rises to Rs 735,500 a month
Quick reference: tax at common salaries
| Monthly salary (Rs) | Annual tax 2026-27 | Monthly tax | Take-home / month | Annual tax 2025-26 |
|---|---|---|---|---|
| 50,000 | 0 | 0 | 50,000 | 0 |
| 100,000 | 6,000 | 500 | 99,500 | 6,000 |
| 150,000 | 72,000 | 6,000 | 144,000 | 72,000 |
| 200,000 | 156,000 | 13,000 | 187,000 | 162,000 |
| 300,000 | 416,000 | 34,667 | 265,333 | 466,000 |
| 450,000 | 918,000 | 76,500 | 373,500 | 1,071,000 |
| 600,000 | 1,494,000 | 124,500 | 475,500 | 1,701,000 |
| 1,000,000 | 3,174,000 | 264,500 | 735,500 | 3,685,290 |
Take-home here means salary minus income tax only. Your actual credit will also reflect EOBI, provident fund, loan instalments or any other deductions your employer makes.
Why your payslip may not match these numbers
- Mid-year changes. If you got a raise in January, your employer recalculates the annual tax and recovers the difference over the remaining months, so later deductions jump.
- Bonuses. A bonus is taxed as salary. Employers often deduct the extra tax in the month the bonus is paid, which makes that one payslip look heavy.
- Joining partway through the year. If you started in October, your annual salary is nine months of pay, not twelve, and tax should be based on that lower figure.
- Previous employer. If you changed jobs, give your new employer the salary and tax figures from your old one, otherwise each employer calculates as if it were your only income.
How to check what your employer actually deducted
Checking your deductions takes about ten minutes and is worth doing at least twice a year, once after your first payslip in July and once after any raise or bonus.
- Take the taxable figure from your payslip. Many payslips show a “taxable income” or “taxable salary” line. If yours does not, add basic pay and every allowance that is not marked exempt.
- Project it to an annual figure. Multiply by the number of months you will be paid this tax year and add any bonus or arrears you already know about.
- Work out the annual tax using the slab table above, then subtract the tax already deducted in earlier months.
- Divide what is left by the remaining months. That should be close to the deduction on your current payslip.
- Ask for your annual tax certificate. Employers issue a certificate of salary paid and tax deducted for the year. Keep it: you need its numbers when you file, and it is your proof of tax paid.
You can also log into IRIS and check the withholding statements your employer files against your CNIC. If the tax your employer deducted does not appear there, raise it with HR before you file, because unreported deductions can be hard to claim later.
Salary plus other income
If you also earn rent, profit on savings, or income from a side business, those amounts are taxed under their own rules and do not change how your employer calculates the salary deduction. They do appear in your return, and some of them, such as business income, can affect the rate applied to your total taxable income. If side income becomes a big share of your earnings, it is worth asking a tax practitioner whether you still qualify for the salaried slabs.
Common mistakes
- Applying the top rate to the whole salary. Someone earning Rs 3.6 million is not taxed 25% on all of it. Their effective rate is 11.56%.
- Refusing a raise to “stay in a lower slab”. This never makes sense under Pakistan’s slab system. Extra income is only taxed at the marginal rate.
- Using last year’s slabs. Many online calculators still show 2025-26 rates. Check that any tool you use says Finance Act 2026 or tax year 2027.
- Treating all allowances as tax-free. House rent, conveyance and utility allowances are generally taxable for most private-sector employees.
- Not filing because tax is “already deducted”. Withholding is an advance. Filing your return keeps you on the Active Taxpayers List and lets you claim credits you would otherwise lose.
Ways to legitimately lower your tax
You cannot change the slabs, but you can make sure you are not overpaying. Contributions to approved pension funds and eligible charitable donations can give you tax credits, and Zakat deducted under the Zakat and Ushr Ordinance is deductible from taxable income. These are claimed in your annual return on FBR’s IRIS portal. If your employer deducted more than your final liability, the return is also how you claim the refund.
If you are planning a big purchase on the strength of your new take-home figure, run the numbers through our loan EMI calculator before you commit, so the instalment fits your net pay rather than your gross.
Working abroad instead?
Many Pakistani professionals compare a local salary with a Gulf offer. A UAE job usually has no personal income tax but comes with end-of-service gratuity instead of a provident fund. Our guide on how UAE gratuity is calculated shows what that benefit is actually worth.
The short version
Multiply your taxable monthly salary by 12, find your slab, apply the fixed amount plus the rate on the excess, then divide by 12. Up to Rs 2.2 million a year nothing changed in 2026-27; above that, everyone pays less, and the surcharge on high salaries is gone. To skip the arithmetic, use the Pakistan salary tax calculator, which applies the same slabs and shows the exact formula for your bracket.
Frequently asked questions
What is the tax-free salary limit in Pakistan for 2026-27?
Rs 600,000 a year, which is Rs 50,000 a month. If your taxable salary is at or below that, no income tax is due on it. Above it, tax starts at 1% of the amount over Rs 600,000.
How much tax is deducted from a Rs 100,000 monthly salary?
Rs 100,000 a month is Rs 1,200,000 a year. Tax is 1% of the Rs 600,000 above the exempt limit, which is Rs 6,000 a year or Rs 500 a month, leaving a take-home of Rs 99,500 before any other deductions.
How much tax is deducted from a Rs 200,000 monthly salary in 2026-27?
Rs 2,400,000 a year falls in the Rs 2.2 to 3.2 million slab. Tax is Rs 116,000 plus 20% of Rs 200,000, which is Rs 156,000 a year or Rs 13,000 a month. In 2025-26 the same salary paid Rs 162,000.
Does a pay rise into a higher slab reduce my take-home pay?
No. Pakistan uses a slab system where the higher rate only applies to the part of your income above each threshold. A raise always increases your take-home pay, even if it moves you into a new slab.
Is there a surcharge on salary income in 2026-27?
No. In 2025-26, salaried individuals with taxable income above Rs 10 million paid a 9% surcharge on their tax under section 4AB. Finance Act 2026 withdrew that surcharge for salary income from tax year 2027.
Do I need to file a tax return if my employer already deducts tax?
Generally yes if your income is above the taxable limit, and filing is also how you get on the Active Taxpayers List, which lowers withholding on banking, property and vehicle transactions. Employer deductions are an advance payment; the return on IRIS settles your final liability.
This guide is general information, not professional advice. Rates and rules change — check the official source before you file or sign anything. See our Disclaimer.