Income tax slabs 2026-27 for salaried and business income

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 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.

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.

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.

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.

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.

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.

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.

Salaried vs business tax on the same income

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

If you’re deciding how to set up a business, our guide to business structures in 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 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 and filer vs non-filer.

More guides: salary tax calculator, how to become a filer, how to get an NTN, Business & Trade.