Tax on Bonus Income in Pakistan (TY 2025-26)
Pakistan bonus tax TY 2025-26 - how bonuses are taxed under salaried slabs, employer WHT calculations, year-end bonus impact, and IRIS reconciliation.
Worked example: Rs 100,000 per month
Annual income Rs 1,200,000 - here's how it would be taxed both ways under Finance Act 2025.
| Taxable income band | Rate | Income in band | Tax in band |
|---|---|---|---|
| Up to Rs 600,000 | 0% | Rs 600,000 | Rs 0 |
| Rs 600,001 – Rs 1,200,000 | 1% | Rs 600,000 | Rs 6,000 |
| Total slab tax | Rs 6,000 | ||
Bonus is taxable salary, not a separate income head
Bonuses paid by your employer - performance bonus, year-end bonus, Eid bonus, completion bonus - are taxable as salary income under Section 12 of the Ordinance. There is no separate 'bonus tax rate' in Pakistan; the bonus is added to your annual salary and the combined figure is taxed under the salaried slab table. Your employer recomputes the WHT projection when paying the bonus, so the deduction on a bonus month is often visibly larger than a regular salary month.
How bonus pushes you into the next slab
If your regular monthly salary lands you in the 11% slab (PKR 1.2M–2.2M annual taxable income) and a bonus pushes the annual total past PKR 2.2M, the incremental income hits 23% - more than double. This is why year-end bonuses can feel disproportionately taxed: they often sit at the boundary of two slabs. Use the Pakistan Income Tax Calculator with annual income = salary + bonus to compute the actual hit before negotiating the timing of a bonus.
WHT timing and the year-end reconciliation
Employers project annual income and deduct Section 149 WHT monthly proportional to that projection. When a bonus lands, the employer should revise the projection upward and adjust the next month's deduction - but many Pakistani employers under-deduct on bonus months and the gap surfaces only at year-end. The fix is your IRIS return: declare full annual salary (salary + all bonuses + benefits), compute slab tax, and reconcile against the WHT actually deducted by the employer.
Exempt allowances vs taxable bonuses
Some employer payments are exempt and don't behave like bonuses: medical allowance up to 10% of basic, leave passage subject to limits, and certain provident-fund-style contributions. These appear on the salary slip but don't add to taxable salary. Anything labelled 'bonus' is generally taxable. Check the labelling carefully on your employer's salary breakup - sometimes a discretionary allowance is just a bonus by another name.
Frequently asked questions
Is bonus income taxed differently in Pakistan?
No. Bonuses are added to annual salary and taxed under the salaried slab table. There is no separate bonus tax rate.
Why does my employer deduct more tax on a bonus month?
Because the projected annual income jumps when the bonus is paid, the employer revises the Section 149 WHT projection upward and the next deduction reflects the higher slab the bonus pushed you into.
Does a bonus put me in a higher slab?
Possibly - if the bonus pushes total annual income past a slab boundary, the incremental amount is taxed at the next slab rate, which can feel like a big jump on the bonus itself.
Are medical and leave allowances bonuses?
No. Medical allowance up to 10% of basic and certain leave passage payments are exempt under the Income Tax Ordinance and don't add to taxable salary.
Can I claim a refund if too much was deducted on a bonus?
Yes if your year-end IRIS return shows total WHT exceeded actual tax due. The system computes the refund automatically once your annual return is submitted and verified.