# Income tax slabs 2026-27 for salaried and business income

URL: https://which.pk/business/guides/income-tax-slabs-2026-27/
Author: Ahtisham Imtiaz
Updated: 13 Oct 2026

## Summary

For tax year 2027 (1 July 2026 to 30 June 2027), salaried individuals pay nothing on the first Rs 6 lakh of taxable income, then rates rise across eight slabs to 35% above Rs 70 lakh. The Finance Act 2026 cut four salaried bands and removed the 9% surcharge on high salaries. Business individuals and AOPs keep last year's six slabs, 0% to 45% above Rs 56 lakh, plus a 10% surcharge above Rs 1 crore. Salary counts as salaried only if it exceeds 75% of taxable income.

## Key facts

- Tax-free up to: Rs 6 lakh a year
- Top salaried rate: 35% above Rs 70 lakh
- Top business rate: 45% above Rs 56 lakh
- Tax year 2027: 1 Jul 2026 to 30 Jun 2027

For tax year 2027 (1 July 2026 to 30 June 2027), the first **Rs 6 lakh** of taxable income is tax-free. Above that, salaried people pay rising rates across eight slabs, up to **35% above Rs 70 lakh**. Business individuals and partnerships pay higher rates, up to **45% above Rs 56 lakh**. The tables below come from FBR's copy of the Income Tax Ordinance as amended by the Finance Act 2026. To skip the maths, use our [income tax calculator](/business/tools/salary-tax-calculator/) for Pakistan salaries.

## Which table applies to me?

The Ordinance has two tables for individuals:

- **Salaried table:** you use it if your salary is **more than 75% of your taxable income**.
- **Non-salaried table:** for every other individual, and for associations of persons (AOPs). In the Ordinance an AOP includes a firm and a limited liability partnership, but not a company.

So a salaried person who also earns a lot from a side business can fall into the non-salaried table. Both tables work on **taxable income**, not gross pay. The tax year is named after the 30 June it ends on, so "2026-27" and "tax year 2027" mean the same year.

## Salary tax slabs for 2026-27

These are the rates in the First Schedule, Part I, Division I, clause (2), as substituted by the Finance Act 2026. FBR's withholding rate card lists the same eight slabs.

| Annual taxable income | Tax |
|---|---|
| Up to Rs 6 lakh | 0% |
| Rs 6 lakh to Rs 12 lakh | 1% of the amount above Rs 6 lakh |
| Rs 12 lakh to Rs 22 lakh | Rs 6,000 + 11% above Rs 12 lakh |
| Rs 22 lakh to Rs 32 lakh | Rs 1.16 lakh + 20% above Rs 22 lakh |
| Rs 32 lakh to Rs 41 lakh | Rs 3.16 lakh + 25% above Rs 32 lakh |
| Rs 41 lakh to Rs 56 lakh | Rs 5.41 lakh + 29% above Rs 41 lakh |
| Rs 56 lakh to Rs 70 lakh | Rs 9.76 lakh + 32% above Rs 56 lakh |
| Above Rs 70 lakh | Rs 14.24 lakh + 35% above Rs 70 lakh |

The percentage applies only to the part of your income inside that band. The fixed amount is the tax on everything below the band.

## What changed for salaried people in budget 2026-27?

Finance Minister Muhammad Aurangzeb presented the budget on 12 June 2026. The National Assembly passed the Finance Bill on 26 June, and the Finance Act 2026 was enacted on 27 June, effective from 1 July 2026, according to KPMG's brief.

| Annual taxable income | Tax year 2026 rate | Tax year 2027 rate |
|---|---|---|
| Up to Rs 22 lakh | 0%, 1%, 11% | No change |
| Rs 22 lakh to Rs 32 lakh | 23% | **20%** |
| Rs 32 lakh to Rs 41 lakh | 30% | **25%** |
| Rs 41 lakh to Rs 56 lakh | 35% | **29%** |
| Rs 56 lakh to Rs 70 lakh | 35% | **32%** |
| Above Rs 70 lakh | 35% | 35% |

The Act also removed the **surcharge on salaried individuals**. The surcharge started at 10% in 2024 and was cut to 9% for salaried people in 2025. Now none applies to individuals deriving income under the head "Salary".

So if you earn up to Rs 22 lakh a year (about Rs 1.83 lakh a month), your tax hasn't changed. The cut starts above that.

For comparison, in tax year 2025 the salaried table charged 5% (not 1%) between Rs 6 lakh and Rs 12 lakh, and 15% (not 11%) up to Rs 22 lakh.

## How much tax on my salary in 2026-27?

Our calculations below assume your whole salary is taxable income, with no exempt allowances, tax credits or other income. The 2026 column uses last year's table.

| Monthly salary | Tax a year (2027) | Tax a month (2027) | Tax a year (2026) |
|---|---|---|---|
| Rs 50,000 | Rs 0 | Rs 0 | Rs 0 |
| Rs 1 lakh | Rs 6,000 | Rs 500 | Rs 6,000 |
| Rs 1.5 lakh | Rs 72,000 | Rs 6,000 | Rs 72,000 |
| Rs 2 lakh | Rs 1.56 lakh | Rs 13,000 | Rs 1.62 lakh |
| Rs 2.5 lakh | Rs 2.76 lakh | Rs 23,000 | Rs 3 lakh |
| Rs 3 lakh | Rs 4.16 lakh | About Rs 34,667 | Rs 4.66 lakh |
| Rs 5 lakh | Rs 11.04 lakh | Rs 92,000 | Rs 12.81 lakh |
| Rs 10 lakh | Rs 31.74 lakh | Rs 2.645 lakh | Rs 36.85 lakh (incl. 9% surcharge) |

KPMG's impact table gives the same figures for Rs 1.2 crore a year: Rs 36,85,290 before, Rs 31,74,000 after.

**Rs 2.5 lakh a month, tax year 2027:** Rs 23,000 a month (Rs 1.16 lakh on the first Rs 22 lakh, plus 20% of Rs 8 lakh. Our calculation from the Ordinance table.)

## How your employer deducts the tax

Under section 149, your employer deducts tax from every salary payment. It works out the tax on your **estimated salary for the whole year**, turns that into an average rate, and applies it to each payment.

The credits your employer can adjust under section 149 are for **charitable donations** (section 61) and **contributions to an approved pension fund** (section 63), if you give documentary evidence. See our guide to [pension funds in Pakistan](/money/guides/pension-fund-pakistan/).

## Business and AOP income tax slabs for 2026-27

The Finance Act 2026 **did not change** the rates for business individuals and AOPs, KPMG confirms. The table was last set by the Finance Act 2024.

| Annual taxable income | Tax |
|---|---|
| Up to Rs 6 lakh | 0% |
| Rs 6 lakh to Rs 12 lakh | 15% of the amount above Rs 6 lakh |
| Rs 12 lakh to Rs 16 lakh | Rs 90,000 + 20% above Rs 12 lakh |
| Rs 16 lakh to Rs 32 lakh | Rs 1.7 lakh + 30% above Rs 16 lakh |
| Rs 32 lakh to Rs 56 lakh | Rs 6.5 lakh + 40% above Rs 32 lakh |
| Above Rs 56 lakh | Rs 16.1 lakh + 45% above Rs 56 lakh |

An AOP that is a professional firm barred from incorporating by law or by its regulator pays **40%** instead of 45% on the top band.

**10% surcharge above Rs 1 crore:** Section 4AB adds a surcharge of 10% of your income tax when taxable income is above Rs 1 crore. Since the Finance Act 2026 it applies to business individuals and AOPs only, not to salaried individuals.

## Salaried vs business tax on the same income

Same taxable income, tax year 2027, our calculations from the two tables:

| Taxable income a year | Salaried | Business individual or AOP |
|---|---|---|
| Rs 12 lakh | Rs 6,000 | Rs 90,000 |
| Rs 18 lakh | Rs 72,000 | Rs 2.3 lakh |
| Rs 30 lakh | Rs 2.76 lakh (9.2%) | Rs 5.9 lakh (19.7%) |
| Rs 60 lakh | Rs 11.04 lakh (18.4%) | Rs 17.9 lakh (29.8%) |
| Rs 1.2 crore | Rs 31.74 lakh | Rs 49.39 lakh (incl. 10% surcharge) |

If you're deciding how to set up a business, our guide to [business structures in Pakistan](/business/guides/business-structures-pakistan/) compares these slabs with company tax.

## Other rates that sit outside these slabs

- **Freelancers paid from abroad:** tax on export proceeds is withheld under section 154A at 0.25% for PSEB-registered IT and IT-enabled services, and 1% in other cases. See [freelancer tax](/business/guides/freelancer-tax-pakistan/) for when that is your final tax.
- **Pension from a former employer** is taxed at 0% up to Rs 1 crore a year and 5% above that, under the Ordinance. FBR's rate card adds an age-below-70 condition and the 10% surcharge for the 5% band; the Ordinance prevails where they differ.
- **Super tax** applies only to very large incomes: from tax year 2027, most persons pay 8% of their income only if it exceeds Rs 50 crore.

## Do I still need to file a return?

If you have taxable income, the return is due. For salaried individuals filing online and for other persons except companies, the return is due by **30 September** after the tax year ends. Filing also keeps you on the Active Taxpayers List (ATL); FBR's rate card charges people off the list higher withholding rates on most other payments, such as 15% instead of 7.5% on dividends from power companies (IPPs). KPMG reports that the Finance Act 2026 raised the surcharge for individuals who file late and want to get on the ATL from Rs 1,000 to **Rs 25,000**.

See [how to file an income tax return](/business/guides/how-to-file-income-tax-return/) and [filer vs non-filer](/business/guides/filer-vs-non-filer/).

More guides: [salary tax calculator](/business/tools/salary-tax-calculator/), [how to become a filer](/business/guides/how-to-become-filer/), [how to get an NTN](/business/guides/how-to-get-ntn/), [Business & Trade](/business/).

## Questions people ask

### What are the income tax slabs for salaried persons in 2026-27?

There are eight slabs: 0% up to Rs 6 lakh a year, then 1%, 11%, 20%, 25%, 29% and 32% on each band, and 35% on income above Rs 70 lakh. They apply to tax year 2027, which runs from 1 July 2026 to 30 June 2027.

### Did business tax slabs change in budget 2026-27?

No. The Finance Act 2026 did not change the rates for business individuals and AOPs. They still pay 0% up to Rs 6 lakh, rising to 45% on income above Rs 56 lakh.

### Is there a surcharge on high salaries in 2026-27?

No. The Finance Act 2026 removed the 9% surcharge on salaried individuals. Business individuals and AOPs with taxable income above Rs 1 crore still pay a 10% surcharge on their income tax.

### How much tax is deducted from a Rs 1 lakh monthly salary?

Rs 500 a month, or Rs 6,000 a year, for tax year 2027, if the whole salary is taxable income.

## Sources

- [Income Tax Ordinance, 2001 (amended up to 30.06.2026)](https://download1.fbr.gov.pk/Docs/2026724177725705IncomeTaxOrdinanace2001.pdf), FBR (accessed 13 Oct 2026)
- [Withholding Income Tax Rate Card, updated up to 30 June 2026 per Finance Act 2026](https://download1.fbr.gov.pk/Docs/202681113864992WithholdingTaxRatesCard2027.pdf), FBR (accessed 13 Oct 2026)
- [A Brief of Finance Act, 2026](https://kpmg.com/content/dam/kpmgsites/pk/pdf/2026/07/A%20Brief%20of%20Finance%20Act%202026.pdf.coredownload.inline.pdf), KPMG Taseer Hadi & Co. (accessed 13 Oct 2026)
- [Budget FY26-27: What relief measures has the government announced?](https://www.dawn.com/news/2007344), Dawn (accessed 13 Oct 2026)
- [Govt unveils tax relief across four slabs for salaried individuals in FY2026-27 budget](https://www.geo.tv/latest/668427-govt-proposes-tax-relief-across-four-slabs-for-salaried-individuals-in-fy2026-27-budget), Geo News (accessed 13 Oct 2026)