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Pakistan Income Tax Slabs 2026: Salary Tax Rates Explained + Free Calculator

October 22, 2026 · 5 min read · By the DollarWise team
Pakistan Income Tax Slabs 2026: Salary Tax Rates Explained + Free Calculator
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Every month, a slice of your salary disappears before it reaches your bank account — and most salaried Pakistanis have no idea how that number is calculated. Pakistan’s salary tax works on a slab system: different portions of your income are taxed at different rates, from 0% up to 35%. The good news for 2026: the Finance Act 2025 cut rates on the lower slabs, so most salaried workers pay less than they did last year.

This guide lays out the Tax Year 2026 slabs (the year running July 2025–June 2026), shows the math with worked examples, and explains how monthly withholding works.

Pakistan salary tax slabs for Tax Year 2026

These rates apply to salaried individuals (not business or freelance income, which has separate slabs):

Annual taxable salary Tax rate
Up to Rs. 600,000 0% (no tax)
Rs. 600,001 – 1,200,000 1% of the amount above Rs. 600,000
Rs. 1,200,001 – 2,200,000 Rs. 6,000 + 11% of the amount above Rs. 1,200,000
Rs. 2,200,001 – 3,200,000 Rs. 116,000 + 23% of the amount above Rs. 2,200,000
Rs. 3,200,001 – 4,100,000 Rs. 346,000 + 30% of the amount above Rs. 3,200,000
Above Rs. 4,100,000 Rs. 616,000 + 35% of the amount above Rs. 4,100,000

The key insight: only the income inside each slab is taxed at that slab’s rate. Someone earning Rs. 1.5 million does not pay 11% on the whole amount — the first Rs. 600,000 is tax-free, the next Rs. 600,000 is taxed at 1%, and only the final Rs. 300,000 at 11%.

Note: a 10% surcharge applies on tax payable where taxable income exceeds Rs. 10 million. These figures reflect the Finance Act 2025; always confirm against the latest FBR guidance if rates change mid-year.

Worked examples

Example 1: Rs. 100,000/month (Rs. 1.2M/year). Falls at the top of the second slab: tax = 1% × (1,200,000 − 600,000) = Rs. 6,000/year, or Rs. 500/month.

Example 2: Rs. 150,000/month (Rs. 1.8M/year). Third slab: Rs. 6,000 + 11% × (1,800,000 − 1,200,000) = 6,000 + 66,000 = Rs. 72,000/year, or Rs. 6,000/month.

Example 3: Rs. 300,000/month (Rs. 3.6M/year). Fifth slab: Rs. 346,000 + 30% × (3,600,000 − 3,200,000) = 346,000 + 120,000 = Rs. 466,000/year, or about Rs. 38,833/month.

Notice how the marginal rate climbs: the jump from Rs. 150k to Rs. 300k monthly more than sextuples the tax. That is the slab system doing exactly what it is designed to do.

How monthly withholding (WHT) works

Your employer does not wait until year-end. Each month, payroll estimates your annual taxable salary, computes the annual tax from the slabs above, and deducts one-twelfth:

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  1. Annualize: monthly gross × 12 (plus expected bonuses and allowances that count as salary).
  2. Compute annual tax using the slab table.
  3. Divide by 12 for the monthly deduction shown on your payslip.
  4. Adjust during the year: increments, bonuses, or job changes trigger a recalculation, which is why your “tax” line sometimes jumps mid-year.

Common payslip confusion: allowances like conveyance or medical may have their own exemptions, and employer-provided benefits can count as taxable salary. If your withheld amount looks wrong, ask payroll for the annual computation sheet — they are required to base it on these slabs.

What changed vs. last year (Finance Act 2025 relief)

Tax Year 2026 brought genuine relief for salaried workers:

  • The 5% slab became 1% (Rs. 600k–1.2M) — an 80% rate cut for lower-middle earners.
  • The 15% slab became 11% (Rs. 1.2M–2.2M).
  • The 25% slab became 23% (Rs. 2.2M–3.2M).
  • The 30% and 35% top slabs are unchanged.

Someone earning Rs. 1.8M/year paid Rs. 120,000 under the old rates and pays Rs. 72,000 now — a Rs. 48,000 annual saving. If your employer’s payroll software was slow to update, check that your deductions reflect the new rates.

Calculate yours in seconds

Slab math is simple but fiddly, and one misplaced zero changes everything. Skip the manual arithmetic with our free Pakistan income tax calculator: enter your monthly or annual salary and get your annual tax, monthly withholding, and effective rate instantly — no sign-up, runs in your browser.

Quick sanity checks when using any calculator: confirm it uses Tax Year 2026 slabs (not last year’s), enter taxable salary (gross minus exempt allowances if you know them), and remember the result is income tax only — it does not include EOBI, pension, or other deductions.

Disclaimer: this guide explains the published slab structure for general understanding and is not tax advice. Individual situations — multiple income sources, exemptions, surcharges — can change the final liability. Consult a tax professional for filing decisions.

Frequently asked questions

What are Pakistan’s salary income tax slabs for 2026? For Tax Year 2026, salaried income is taxed at 0% up to Rs. 600,000, then 1% to 35% across five higher slabs, topping out at 35% above Rs. 4.1 million. The 2025 Finance Act cut the lower-slab rates, so most salaried workers pay less than last year.

How much tax will I pay on a Rs. 150,000 monthly salary in Pakistan? Rs. 150,000/month is Rs. 1.8 million/year. Annual tax is Rs. 6,000 + 11% of Rs. 600,000 = Rs. 72,000, or about Rs. 6,000/month withheld by your employer.

Is salary income below Rs. 600,000 per year taxable in Pakistan? No. Annual salary income up to Rs. 600,000 (Rs. 50,000/month) is taxed at 0% — no income tax is due, though filing may still be required.

Has Pakistan reduced salary tax rates for 2026? Yes. The Finance Act 2025 lowered the rates on the lower salary slabs for Tax Year 2026 — the 5% slab became 1%, 15% became 11%, and 25% became 23% — giving relief to middle-income earners.

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Written by the DollarWise team

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