A landmark relief budget for the salaried class
The Federal Budget 2026-27, presented on 12 June 2026, delivers the most significant income tax relief for salaried individuals in several years. Under the Finance Act 2026, tax rates on the middle and upper salary slabs have been cut, a new slab has been introduced, and the 9% surcharge on high earners has been abolished. These changes take effect from Tax Year 2027, which begins on 1 July 2026.
What changed in the salary tax slabs
The first three slabs are unchanged, but every bracket above PKR 2.2 million has been reduced:
- PKR 2,200,001 to 3,200,000: reduced from 23% to 20%.
- PKR 3,200,001 to 4,100,000: reduced from 30% to 25%.
- PKR 4,100,001 to 5,600,000: reduced from 35% to 29%.
- PKR 5,600,001 to 7,000,000: new slab at 32%.
- Above PKR 7,000,000: 35%, with the 9% surcharge abolished.
The new salary tax table (Tax Year 2027)
- Up to PKR 600,000: 0%.
- PKR 600,001 to 1,200,000: 1% of the amount above 600,000.
- PKR 1,200,001 to 2,200,000: PKR 6,000 + 11% of the amount above 1,200,000.
- PKR 2,200,001 to 3,200,000: PKR 116,000 + 20% of the amount above 2,200,000.
- PKR 3,200,001 to 4,100,000: PKR 316,000 + 25% of the amount above 3,200,000.
- PKR 4,100,001 to 5,600,000: PKR 541,000 + 29% of the amount above 4,100,000.
- PKR 5,600,001 to 7,000,000: PKR 976,000 + 32% of the amount above 5,600,000.
- Above PKR 7,000,000: PKR 1,424,000 + 35% of the amount above 7,000,000.
How much will you actually save?
Tax in Pakistan is progressive, so each rate applies only to the income that falls within that band. Two quick examples:
- A salary of PKR 3,600,000 per year: tax falls from about PKR 466,000 to PKR 416,000, a saving of roughly PKR 50,000 a year.
- A salary of PKR 6,000,000 per year: tax falls from about PKR 1,281,000 to PKR 1,104,000, a saving of roughly PKR 177,000 a year.
Higher earners who previously paid the 9% surcharge benefit further from its removal.
Beyond salaries: super tax relief
The budget also eases the corporate burden. The super tax on company income between PKR 150 million and PKR 500 million has been withdrawn, and the top super tax slab is reduced from 10% to 8% (banks, exploration and production companies, and fertilizer manufacturers are excluded). This is intended to support documented businesses and encourage investment.
What you should do now
The lower rates apply to income earned from 1 July 2026 onwards, so your monthly withholding from July should reflect the new slabs. If your employer has not updated payroll, raise it early. For the return you file in 2026, for Tax Year 2026, the older slabs still apply.
Talk to us
Every salary structure is different, and allowances, bonuses and deductions change the final figure. Tehsin Associates can model your exact liability under the new slabs and help you plan ahead.
Disclaimer: Figures are based on the Finance Act 2026 and Budget 2026-27 documents. Always confirm against the final FBR notifications before filing.