Home / Blog / Income Tax Slabs Pakistan 2025–26
Income Tax Slabs Pakistan 2025–26 & 2026–27
FBR tax rates for both tax years — 2025–26 slabs for your current return (use official FBR-announced due date), plus proposed 2026–27 rates from Finance Bill 2026 (from July 1, 2026, if enacted).
IN THIS GUIDE
1.NEW: 2026–27 slabs (Budget 2026)2.2025–26 salaried slabs (for current return filing)3.Business individuals & AOPs4.Freelancers & foreign income5.What changed in Budget 2026–276.How to calculate your tax7.Section 149: employer withholding8.FAQ1. NEW: Income Tax Slabs 2026–27 (Budget 2026)
Effective Jul 1, 2026The Finance Bill 2026 (Budget 2026–27) proposes rate cuts in four brackets and proposes to abolish the 9% surcharge. These rates apply to income earned from July 1, 2026 onwards — i.e., Tax Year 2027. If you are filing your return for income earned in 2025–26, see the 2025–26 table below.
| Annual Income | New Rate (2026–27) | Old Rate (2025–26) | Tax Formula |
|---|---|---|---|
| Up to PKR 600,000 | 0% | 0% | Nil |
| PKR 600,001 – 1,200,000 | 2.5% | 2.5% | 2.5% of amount above PKR 600,000 |
| PKR 1,200,001 – 2,200,000 | 11% | 11% | PKR 15,000 + 11% above PKR 1,200,000 |
| PKR 2,200,001 – 3,200,000 | 20% | 23% → 20% | PKR 125,000 + 20% above PKR 2,200,000 |
| PKR 3,200,001 – 4,100,000 | 25% | 30% → 25% | PKR 325,000 + 25% above PKR 3,200,000 |
| PKR 4,100,001 – 5,600,000 | 29% | 35% → 29% ✦ | PKR 550,000 + 29% above PKR 4,100,000 |
| PKR 5,600,001 – 7,000,000 | 32% | 35% → 32% ✦ | PKR 985,000 + 32% above PKR 5,600,000 |
| Above PKR 7,000,000 | 35% | 35% | PKR 1,433,000 + 35% above PKR 7,000,000 |
✦ = new bracket proposed in Budget 2026. Source: Finance Bill 2026-27. Subject to enactment/approval.
Surcharge proposal: Finance Bill 2026 proposes removal of the 9% surcharge on salaried income above PKR 10,000,000.
2. Income Tax Slabs for Salaried Persons 2025–26
These are the rates that apply to income earned July 2025 – June 2026. Use these when filing your tax return for Tax Year 2026 (as per official FBR-announced due date).
You are a salaried individual if 75% or more of your total taxable income comes from salary.
| Annual Income | Rate | Tax Formula | Max Tax in Slab |
|---|---|---|---|
| Up to PKR 600,000 | 0% | Nil | Nil |
| PKR 600,001 – 1,200,000 | 2.5% | 2.5% of amount above PKR 600,000 | Up to PKR 15,000 |
| PKR 1,200,001 – 2,200,000 | 11% | PKR 15,000 + 11% above PKR 1,200,000 | Up to PKR 125,000 |
| PKR 2,200,001 – 3,200,000 | 23% | PKR 125,000 + 23% above PKR 2,200,000 | Up to PKR 355,000 |
| PKR 3,200,001 – 4,100,000 | 30% | PKR 355,000 + 30% above PKR 3,200,000 | Up to PKR 625,000 |
| Above PKR 4,100,000 | 35% | PKR 625,000 + 35% above PKR 4,100,000 | — |
Source: Finance Act 2025. Rates applicable to Tax Year 2026 (income July 2025 – June 2026).
Surcharge (2025–26 only): If annual salary income exceeded PKR 10,000,000, an additional 9% surcharge applied. For 2026–27, removal is currently proposed in Finance Bill 2026.
3. Income Tax Slabs for Business Individuals & AOPs 2025–26
If less than 75% of your income is from salary — or you are a sole proprietor, partner in an AOP, or run a business — you fall under the non-salaried / business individual slabs. Rates are significantly higher than for salaried persons.
| Annual Income | Rate | Tax Formula |
|---|---|---|
| Up to PKR 600,000 | 0% | Nil |
| PKR 600,001 – 1,200,000 | 15% | 15% of amount above PKR 600,000 |
| PKR 1,200,001 – 2,400,000 | 20% | PKR 90,000 + 20% above PKR 1,200,000 |
| PKR 2,400,001 – 3,000,000 | 25% | PKR 330,000 + 25% above PKR 2,400,000 |
| PKR 3,000,001 – 4,000,000 | 30% | PKR 480,000 + 30% above PKR 3,000,000 |
| PKR 4,000,001 – 6,000,000 | 35% | PKR 780,000 + 35% above PKR 4,000,000 |
| Above PKR 6,000,000 | 45% | PKR 1,480,000 + 45% above PKR 6,000,000 |
AOP rates mirror business individual rates. Verify current year rates at fbr.gov.pk as Finance Act amendments may apply.
Key difference: A salaried person earning PKR 1,200,000 pays PKR 6,000 in tax (1%). A business individual at the same income pays PKR 90,000(15%). That's 6× more — purely because of income category, not income level.
4. Tax Rates for Freelancers & Foreign Income 2025–26
Freelancers exporting services to foreign clients have a separate, favourable regime under Section 154A. These are final taxes — they cannot be refunded even if your total tax liability is zero.
PSEB registration is free and reduces your effective tax rate by 75%. Even if you don't plan to use PSEB's other services, registration purely for the tax benefit is worth it for any freelancer earning consistently.
5. What Changed — Budget 2025–26 & Budget 2026–27
Budget 2025–26 (applies to Tax Year 2026, returns due on the official FBR-announced due date):
600k–1.2M bracket: 5% → 2.5%
Finance Act 2025 halved this rate. A person earning PKR 1M now pays PKR 10,000 vs PKR 20,000 in 2024–25.
1.2M–2.2M bracket: 15% → 11%
A PKR 2M earner saves roughly PKR 40,000 in annual tax.
2.2M–3.2M bracket: 25% → 23%
Modest reduction; saves PKR 20,000 at the top of this bracket.
High-income surcharge: 10% → 9%
Dropped 1 percentage point for those earning above PKR 10M.
Budget 2026–27 (Finance Bill 2026, effective July 1, 2026):
2.2M–3.2M bracket: 23% → 20%
Three-point drop provides PKR 30,000 savings at the top of this bracket.
3.2M–4.1M bracket: 30% → 25%
Five-point drop; saves up to PKR 45,000 for earners in this range.
New 4.1M–5.6M bracket at 29%
Replaces the flat 35% that previously applied. Saves up to PKR 90,000 for earners at PKR 5.6M.
New 5.6M–7M bracket at 32%
Another intermediate step before the top 35% rate, adding more granularity for higher earners.
9% surcharge proposed to be abolished
Finance Bill 2026 proposes removing surcharge for high earners (above PKR 10M annual salary), subject to enactment.
6. How to Calculate Your Income Tax
Pakistan uses a progressive slab system — you pay each rate only on the portion of income that falls within that bracket. Here are two worked examples:
Example 1: Salaried person earning PKR 2,500,000/year
Example 2: Salaried person earning PKR 1,000,000/year
7. Section 149: Employer Withholding from Salary
Under Section 149of the Income Tax Ordinance 2001, every employer must deduct income tax from employees' salaries each month. The process:
Estimate annual salary
Employer projects your full-year gross salary at the start of each tax year.
Calculate annual tax
Apply the slab rates to the projected annual salary to compute total annual tax liability.
Divide by 12
Monthly deduction = Annual tax ÷ 12. Adjusted if salary changes during the year.
Deposit with FBR
Employer deposits deducted tax with FBR by the 15th of the following month.
Issue Form 149 certificate
At year end, employer issues a salary certificate showing total salary and tax deducted. This is your key document for filing your annual return.
Employer withholding under Section 149 settles your salary tax liability — but it does not replace your obligation to file an annual income tax return. You must still file your return on IRIS by the FBR deadline to stay on the Active Taxpayer List.
8. Frequently Asked Questions
RELATED GUIDES
How to File FBR Tax Return 2025–26
Use these slabs to file your return — step-by-step IRIS walkthrough.
Non-Filer vs Filer in Pakistan
How filer status changes withholding rates on banking, property, and investments.
How to Become a Tax Filer
Get on the Active Taxpayer List and avoid non-filer surcharges.
Know your slab — now file your return
TaxCopilot applies the correct slabs automatically and files your FBR return for you. No manual calculations.