Salaried Tax Changes in Pakistan Budget 2026-27
Budget 2026-27 salaried tax changes - new 8-band slab structure, 23% band cut to 20%, top 35% rate starts at PKR 7M, PKR 10M surcharge scrapped.
Worked example: Rs 300,000 per month
Annual income Rs 3,600,000 - 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 |
| Rs 1,200,001 - Rs 2,200,000 | 11% | Rs 1,000,000 | Rs 110,000 |
| Rs 2,200,001 - Rs 3,200,000 | 23% | Rs 1,000,000 | Rs 230,000 |
| Rs 3,200,001 - Rs 4,100,000 | 30% | Rs 400,000 | Rs 120,000 |
| Total slab tax | Rs 466,000 | ||
The headline change: 6 bands to 8
Budget 2026-27 restructured Pakistan's salaried income tax slabs from six bands to eight. The bottom three slabs are unchanged - the PKR 600,000 exemption remains, income up to PKR 1.2M still attracts the symbolic 1% rate, and income up to PKR 2.2M is still taxed at 11%. The reshuffle happens above PKR 2.2M, where the old 23% band has been trimmed to 20%, and the old single 30% band between PKR 3.2M and PKR 4.1M has been split into three new intermediate rates (25%, 29%, 32%) that walk income up to the new top-rate threshold of PKR 7M instead of the previous PKR 4.1M.
The PKR 10M surcharge is gone
Finance Act 2025 had introduced a 9-10% surcharge on individuals and AOPs whose taxable income exceeded PKR 10 million annually - a politically unpopular measure that hit senior salaried professionals harder than any slab change. Budget 2026-27 SCRAPS this surcharge entirely from TY 2026-27 onwards. Filers above PKR 10M now compute their tax purely off the new 8-band slab table with no additional charge. This is one of the most material reliefs in the budget for the top end of the salaried bracket - on PKR 15M annual income the surcharge alone was costing roughly PKR 350,000 a year that is now saved.
Who wins and who loses
The big winners are filers earning between PKR 2.2M and PKR 7M annually - the 23% band cut to 20% plus the new 25/29/32% intermediate rates produce noticeably lower tax than the old single 30% / 35% structure. High earners above PKR 10M save the surcharge but pay slightly more in the upper slab bands because the rate steps are denser. Filers earning under PKR 2.2M see no change at all - the bottom three slabs were left intact. Use our Income Tax Calculator with Tax Year 2026-27 selected to see your exact figure.
When the new rates take effect
The Budget 2026-27 measures apply from 1 July 2026 onwards (the start of fiscal year 2026-27). Your salary paid in July 2026 onwards is taxed at the new slabs; salary you've already drawn under TY 2025-26 stays on the old FA 2025 table. Employers across Pakistan will reset their Section 149 monthly withholding calculations in the July 2026 payroll cycle. Tax returns filed for TY 2025-26 (due 30 September 2026) continue to use FA 2025 figures - the new slabs only enter your return next year.
Frequently asked questions
What are the new salaried slabs in Pakistan Budget 2026-27?
Eight bands: 0% to PKR 600k, 1% to 1.2M, 11% to 2.2M, 20% to 3.2M, 25% to 4.1M, 29% to 5.5M, 32% to 7M, and 35% above PKR 7M.
Is the 10% surcharge still applicable on income above PKR 10M?
No. Budget 2026-27 has scrapped the 9-10% surcharge that FA 2025 introduced on individuals and AOPs above PKR 10M. From TY 2026-27 it no longer applies.
Do I pay less tax under Budget 2026-27?
Most salaried filers between PKR 2.2M and PKR 10M pay less - the 23% band became 20% and the new intermediate rates are gentler than the old 30% jump. Top earners save the surcharge but pay slightly more in the new upper bands.
When do the new slabs take effect?
From 1 July 2026 (start of TY 2026-27). Salary paid before then is taxed under the old FA 2025 slabs.
Where can I see my exact tax under the new slabs?
Open the Income Tax Calculator, pick Tax Year 2026-27 in the dropdown, and enter your annual taxable income. The calculator uses the as-announced rates.