Pakistan’s salaried-individual income tax rates work on a progressive slab basis, and the slabs changed again for Tax Year 2027. The salaried table applies where income chargeable under the head “salary” is more than 75% of taxable income.
This article sets out those rates as they stand in the law, shows how the calculation works on real figures, and explains the two things that cause most of the confusion we see: the difference between your marginal rate and your effective rate, and the difference between your salary package and your taxable salary.
The rates below were read from the Income Tax Ordinance, 2001 as amended up to 30 June 2026, and cross-checked against the Finance Act, 2026 that made the change. Sources are listed at the end.
What Tax Year 2027 means
Under section 74(1) of the Ordinance, a normal tax year is a period of twelve months ending on 30 June, and it is named after the calendar year in which that date falls.
So Tax Year 2027 runs from 1 July 2026 to 30 June 2027. Salary earned in that window is taxed at the rates below. Salary earned before 1 July 2026 belongs to Tax Year 2026, which had a different table and a surcharge that no longer applies to salary.
This matters more than it sounds. A rate table found online without a year attached to it is not usable, and material written before the Finance Act, 2026 will show the older figures.
Pakistan salary tax slabs for Tax Year 2027
These rates come from Division I of Part I of the First Schedule, clause (2). That clause applies where income chargeable under the head “salary” is more than seventy-five per cent of taxable income. Where salary is a smaller share than that, a different table applies and the figures below are not the right ones.
| Annual taxable income | Tax |
|---|---|
| Up to Rs 600,000 | Nil |
| Rs 600,001 to Rs 1,200,000 | 1% of the amount exceeding Rs 600,000 |
| Rs 1,200,001 to Rs 2,200,000 | Rs 6,000 + 11% of the amount exceeding Rs 1,200,000 |
| Rs 2,200,001 to Rs 3,200,000 | Rs 116,000 + 20% of the amount exceeding Rs 2,200,000 |
| Rs 3,200,001 to Rs 4,100,000 | Rs 316,000 + 25% of the amount exceeding Rs 3,200,000 |
| Rs 4,100,001 to Rs 5,600,000 | Rs 541,000 + 29% of the amount exceeding Rs 4,100,000 |
| Rs 5,600,001 to Rs 7,000,000 | Rs 976,000 + 32% of the amount exceeding Rs 5,600,000 |
| Above Rs 7,000,000 | Rs 1,424,000 + 35% of the amount exceeding Rs 7,000,000 |
The first Rs 600,000 of taxable income remains untaxed, and the highest rate is 35%.
How the calculation works
The table is progressive. You do not pay one rate on your whole income — you pay the fixed amount for the band you land in, plus the band’s rate on the part of your income above where that band starts.
Take an annual taxable salary of Rs 3,600,000. That falls in the band running from Rs 3,200,001 to Rs 4,100,000, so the calculation starts from Rs 3,200,000:
- Fixed amount for that band: Rs 316,000
- Income above the band floor: Rs 3,600,000 − Rs 3,200,000 = Rs 400,000
- 25% of Rs 400,000 = Rs 100,000
- Annual tax: Rs 316,000 + Rs 100,000 = Rs 416,000
The fixed amount is not an extra charge. It is simply the tax already accumulated on the bands below, worked out once and written into the table so you do not have to add up every band yourself.
Worked examples for Tax Year 2027
Six figures across the range. Each is calculated on the table above, and the monthly column is the annual tax divided by twelve.
| Annual taxable salary | Annual tax | Average per month |
|---|---|---|
| Rs 1,200,000 | Rs 6,000 | Rs 500 |
| Rs 1,800,000 | Rs 72,000 | Rs 6,000 |
| Rs 2,400,000 | Rs 156,000 | Rs 13,000 |
| Rs 3,600,000 | Rs 416,000 | Rs 34,667 |
| Rs 6,000,000 | Rs 1,104,000 | Rs 92,000 |
| Rs 12,000,000 | Rs 3,174,000 | Rs 264,500 |
As a share of taxable salary, that is about 0.5% at Rs 1,200,000, 6.5% at Rs 2,400,000, 18.4% at Rs 6,000,000 and 26.5% at Rs 12,000,000. The tax rises faster than the salary does, which is what a progressive table is designed to do, but the overall share stays well below the 35% headline rate even at the highest figure shown here. The next section explains why.
The monthly column is an average, not a payroll instruction. Section 149 requires an employer to deduct at an average rate on estimated annual salary, adjusted through the year as circumstances change, so what appears on any single payslip can reasonably differ from a twelfth of the annual figure.
Marginal rate and effective rate
These two get mixed up constantly, and the difference is worth a moment.
Your marginal rate is the rate that applies to your next rupee of taxable salary. At Rs 3,600,000 that is 25%.
Your effective rate is your total tax divided by your total taxable salary. At Rs 3,600,000 that is Rs 416,000 on Rs 3,600,000, or about 11.6%.
Wherever any tax is payable at all, the effective rate is lower than the marginal rate, because the bands below keep their own lower rates — including the first Rs 600,000, which is not taxed. Even at Rs 12,000,000, where the marginal rate is 35%, the effective rate is about 26.5%.
It also means that, on this table, moving into a higher band never leaves you worse off overall. Crossing a threshold changes the rate on the amount above it, not on everything you earn.
What counts as taxable salary?
This is the part that most affects whether a figure you calculate is the figure you will actually pay.
Taxable salary is not the same as your total employment package, and it is not simply the gross figure on your offer letter. Getting from one to the other is a separate exercise, and it depends on facts the rate table knows nothing about:
- Allowances and benefits in kind are treated under their own rules. A benefit being non-cash does not make it non-taxable.
- Perquisites such as accommodation, a vehicle or subsidised services have their own valuation rules.
- Certain items are exempt or subject to specific treatment, and the conditions attached to them matter.
- Tax credits and reductions available to a particular person reduce tax after the slab calculation, not before it.
- Where salary is 75% or less of your taxable income — because you also have business, property or other income — the table above is not the applicable one.
None of that means the excluded items are automatically tax-free. It means the correct taxable figure has to be established before the slab table is applied to it, and that is a question about your particular contract and circumstances.
Our Pakistan Salary Tax Calculator begins from a taxable salary figure that you supply. It deliberately does not attempt to convert a full employment package into taxable salary, because doing so reliably needs the underlying facts rather than a single number.
Is there a salaried surcharge in Tax Year 2027?
No. For Tax Year 2027 a salaried individual pays no surcharge under section 4AB.
This is a genuine change and an easy one to get wrong. For Tax Year 2026 the section carried a proviso charging a surcharge of nine per cent of the income tax where a salaried individual’s taxable income exceeded Rs 10,000,000. The Finance Act, 2026 replaced that wording with the words “no surcharge shall be payable”.
Two points worth keeping straight:
- Section 4AB still carries a ten per cent surcharge in its main part, where taxable income exceeds Rs 10,000,000. That charge is not added to a salaried individual’s tax under the table above: the proviso disapplies the section for income chargeable under the head “salary”. It remains relevant to individuals and associations of persons taxed under the other table — which is a different case, not a further step in this one.
- So for Tax Year 2027 nothing extra is added above Rs 10,000,000 for a salaried individual. There is no nine per cent, and no ten per cent. Any calculator or article still adding nine per cent at that threshold is working from the Tax Year 2026 position and will overstate the tax.
Calculate your salary tax for Tax Year 2027
Rather than working through the table by hand, you can use our Pakistan Salary Tax Calculator. It covers Tax Year 2027 and Tax Year 2026, gives your effective and marginal rates alongside the annual figure, and shows the arithmetic it used — so you can check it against the table above rather than take it on trust.
It sits alongside our other practical tools for Pakistan tax and corporate compliance.
Sources and limitations
The rates, the tax-year definition and the surcharge position in this article were read directly from the operative legislation, not from secondary summaries:
- Income Tax Ordinance, 2001 — amended up to 30 June 2026 (FBR): section 74 for the tax year, section 4AB for the surcharge, and the First Schedule, Part I, Division I, clause (2) for the salary rates.
- Finance Act, 2026 (FBR): the Act that substituted the salary table and the section 4AB proviso.
Checked against those sources on 29 August 2026.
This article is general information about the rates for Tax Year 2027. It is not advice on any particular person’s position, and the tax actually payable can differ where benefits, perquisites, exemptions, credits or income under other heads are involved. If your circumstances are not straightforward, or your salary is not the greater part of your income, please get in touch.
This note is general information, not advice on your particular circumstances. Tax law and deadlines change — please confirm the position before acting on it.