Salary Tax Slabs 2026-27 vs 2025-26: What Actually Changed
If you are salaried, the Finance Act 2026 leaves your tax bill either exactly where it was or meaningfully lower. Nobody earning a salary pays more. Below about Rs 2.2 million a year, nothing moves at all. Above it, two of the middle rates were cut, two new bands were inserted before the top rate bites, and the 9% surcharge on salary income over Rs 10 million was abolished. That last point is specific to the salaried class — see the note below.
This page sets the two years side by side and shows what the change is worth in rupees at each income level. Tax Year 2027 runs from 1 July 2026 to 30 June 2027 — the year the Budget 2026-27 governs. Tax Year 2026 was the year before it.
The short version
- Under Rs 2.2 million — no change whatsoever. Same exemption, same 1%, same 11%.
- Rs 2.2m to Rs 3.2m — the marginal rate falls from 23% to 20%.
- Rs 3.2m to Rs 4.1m — the marginal rate falls from 30% to 25%.
- Above Rs 4.1m — instead of jumping straight to 35%, you now pass through 29% and 32% first. The 35% rate does not start until Rs 7 million.
- Above Rs 10 million — the 9% surcharge under section 4AB is gone from 1 July 2026 for salaried individuals. It was not removed for non-salaried taxpayers.
The slabs, side by side
Tax Year 2026 (1 July 2025 – 30 June 2026), six slabs
| Annual salary | Tax |
|---|---|
| Up to Rs 600,000 | Nil |
| Rs 600,001 – 1,200,000 | 1% of the amount above Rs 600,000 |
| Rs 1,200,001 – 2,200,000 | Rs 6,000 + 11% of the amount above Rs 1,200,000 |
| Rs 2,200,001 – 3,200,000 | Rs 116,000 + 23% of the amount above Rs 2,200,000 |
| Rs 3,200,001 – 4,100,000 | Rs 346,000 + 30% of the amount above Rs 3,200,000 |
| Above Rs 4,100,000 | Rs 616,000 + 35% of the amount above Rs 4,100,000 |
Tax Year 2027 (1 July 2026 – 30 June 2027), eight slabs
| Annual salary | Tax |
|---|---|
| Up to Rs 600,000 | Nil |
| Rs 600,001 – 1,200,000 | 1% of the amount above Rs 600,000 |
| Rs 1,200,001 – 2,200,000 | Rs 6,000 + 11% of the amount above Rs 1,200,000 |
| Rs 2,200,001 – 3,200,000 | Rs 116,000 + 20% of the amount above Rs 2,200,000 |
| Rs 3,200,001 – 4,100,000 | Rs 316,000 + 25% of the amount above Rs 3,200,000 |
| Rs 4,100,001 – 5,600,000 | Rs 541,000 + 29% of the amount above Rs 4,100,000 |
| Rs 5,600,001 – 7,000,000 | Rs 976,000 + 32% of the amount above Rs 5,600,000 |
| Above Rs 7,000,000 | Rs 1,424,000 + 35% of the amount above Rs 7,000,000 |
What it is worth in rupees
These are full-year figures on taxable salary income, calculated with the same engine that runs our income tax calculator, so the numbers here and the numbers the calculator gives you will always agree.
| Annual salary | Tax in TY2026 | Tax in TY2027 | You keep | Per month |
|---|---|---|---|---|
| Rs 1,200,000 | Rs 6,000 | Rs 6,000 | — | — |
| Rs 1,800,000 | Rs 72,000 | Rs 72,000 | — | — |
| Rs 2,400,000 | Rs 162,000 | Rs 156,000 | Rs 6,000 | Rs 500 |
| Rs 3,000,000 | Rs 300,000 | Rs 276,000 | Rs 24,000 | Rs 2,000 |
| Rs 3,600,000 | Rs 466,000 | Rs 416,000 | Rs 50,000 | Rs 4,167 |
| Rs 4,200,000 | Rs 651,000 | Rs 570,000 | Rs 81,000 | Rs 6,750 |
| Rs 5,000,000 | Rs 931,000 | Rs 802,000 | Rs 129,000 | Rs 10,750 |
| Rs 6,000,000 | Rs 1,281,000 | Rs 1,104,000 | Rs 177,000 | Rs 14,750 |
| Rs 7,000,000 | Rs 1,631,000 | Rs 1,424,000 | Rs 207,000 | Rs 17,250 |
| Rs 10,000,000 | Rs 2,681,000 | Rs 2,474,000 | Rs 207,000 | Rs 17,250 |
| Rs 10,500,000 | Rs 3,113,040 | Rs 2,649,000 | Rs 464,040 | Rs 38,670 |
| Rs 12,000,000 | Rs 3,685,290 | Rs 3,174,000 | Rs 511,290 | Rs 42,608 |
| Rs 15,000,000 | Rs 4,829,790 | Rs 4,224,000 | Rs 605,790 | Rs 50,482 |
In proportional terms the biggest winners sit between roughly Rs 4.5 million and Rs 6 million, where the bill falls by about 14%. That is the stretch where the old table pushed you into 35% almost immediately and the new one does not.
The surcharge cliff is gone, and that is the biggest single change
Look at the jump between Rs 10,000,000 and Rs 10,500,000 in the table. The saving goes from Rs 207,000 to Rs 464,040 across an extra Rs 500,000 of salary. That is not the slabs. That is section 4AB disappearing.
The surcharge was a cliff rather than a taper. Cross Rs 10 million of taxable income by a single rupee and 9% was added to your entire tax bill, not to the rupee that took you over. In TY2026 that meant a raise could genuinely leave you worse off: someone moved from Rs 9,999,000 to Rs 10,100,000 paid roughly Rs 241,000 more tax on Rs 101,000 more salary, and did not get back to where they started until about Rs 10.39 million.
From TY2027 that trap is simply removed. If you were negotiating around the Rs 10 million line, or deferring a bonus to stay under it, you no longer need to. We wrote about how that cliff worked in more detail in the Rs 10 million surcharge cliff explained.
One important limit. The removal announced in the Budget 2026-27 was for the salaried class. If your income is from business or another non-salary source, do not assume the surcharge has gone for you — check your own position before planning around it. Everything on this page is about taxable salary income.
Who sees no change at all
If your annual taxable salary is Rs 2.2 million or less, the two years are identical to the rupee. The exemption still ends at Rs 600,000, the 1% band still runs to Rs 1.2 million, and the 11% band still runs to Rs 2.2 million. On a salary of Rs 1.8 million you pay Rs 72,000 in both years.
That covers a large share of salaried Pakistan, so it is worth being blunt about it: for most people this Budget did not change income tax. The relief is real, but it is concentrated above Rs 2.2 million.
What this does not change
Three things people routinely assume move with the Budget and did not:
- The Rs 600,000 exemption threshold. Unchanged since TY2023.
- Your filer status. Lower slabs do not put you on the Active Taxpayers List. You still have to file a return to get there, and the withholding rates you pay on banking, property and vehicles still depend on being on it. Our filer status calculator shows what non-filer rates cost.
- Filing deadlines and penalties. Late filing still runs under section 182, and the surcharge to rejoin the ATL under section 182A still applies. See the late filing penalty calculator.
What to do with this
Check your own number rather than reading off the table — the bands are marginal, so a salary between two rows does not scale neatly. Put your annual figure into the income tax calculator, switch between Tax Year 2026 and Tax Year 2027, and read the difference.
If your employer has not updated payroll for the new table, your monthly deduction may still be running at TY2026 rates. That corrects itself when you file, but it is your money sitting with the FBR in the meantime, so it is worth raising with payroll rather than waiting.
Common questions
Does the Budget 2026-27 reduce income tax for salaried people?
Yes, for anyone with taxable salary above roughly Rs 2.2 million a year. Two middle rates were cut, two new bands were added before the 35% rate applies, and the 9% surcharge over Rs 10 million was abolished. Below Rs 2.2 million there is no change.
What are the salary tax slabs for 2026-27?
Nil up to Rs 600,000; 1% to Rs 1.2m; Rs 6,000 + 11% to Rs 2.2m; Rs 116,000 + 20% to Rs 3.2m; Rs 316,000 + 25% to Rs 4.1m; Rs 541,000 + 29% to Rs 5.6m; Rs 976,000 + 32% to Rs 7m; and Rs 1,424,000 + 35% above Rs 7 million.
Has the 10 million surcharge been removed?
Yes. The section 4AB surcharge, which was 10% in TY2025 and 9% in TY2026, is abolished with effect from 1 July 2026. It does not apply in Tax Year 2027.
Which tax year does the Budget 2026-27 apply to?
Tax Year 2027. A Pakistani tax year is named for the year it ends, so the financial year 1 July 2026 to 30 June 2027 is Tax Year 2027.
Do the new slabs change how much tax is deducted from my monthly salary?
They should. Employers deduct against the slab table for the current tax year, so from July 2026 the deduction should follow the TY2027 table. If it has not changed, ask payroll — you can reclaim the excess when you file, but you are out of pocket until then.
These figures cover taxable salary income only and do not account for tax credits, allowances, or income from other sources. They are general information, not advice on your own return.
