Pakistan Income Tax Slabs 2026-27 — Salaried & Business

Income Tax Slabs for Tax Year 2026-27

Pakistan's income tax rates for individuals are set by the Finance Act and depend on whether you are a salaried individual, a non-salaried individual (business person), or an Association of Persons (AOP). Tax year 2026-27 — formally Tax Year 2027 — runs from July 1, 2026 to June 30, 2027.

The Finance Act 2026 received presidential assent on 25 June 2026 and took effect on 1 July 2026. It delivered the largest restructuring of the salaried slabs in several years: eight brackets instead of six, lower rates in the middle, and the withdrawal of the 9% surcharge. Business and AOP rates were left unchanged.

Below are the complete tables with worked examples so you can check your own liability.

Salaried Individuals — Tax Slabs 2026-27

These rates apply to individuals whose salary income is more than 75% of their total income:

• Up to PKR 600,000 — 0% (no tax)
• PKR 600,001 to PKR 1,200,000 — 1% of the amount exceeding PKR 600,000
• PKR 1,200,001 to PKR 2,200,000 — PKR 6,000 + 11% of the amount exceeding PKR 1,200,000
• PKR 2,200,001 to PKR 3,200,000 — PKR 116,000 + 20% of the amount exceeding PKR 2,200,000
• PKR 3,200,001 to PKR 4,100,000 — PKR 316,000 + 25% of the amount exceeding PKR 3,200,000
• PKR 4,100,001 to PKR 5,600,000 — PKR 541,000 + 29% of the amount exceeding PKR 4,100,000
• PKR 5,600,001 to PKR 7,000,000 — PKR 976,000 + 32% of the amount exceeding PKR 5,600,000
• Above PKR 7,000,000 — PKR 1,424,000 + 35% of the amount exceeding PKR 7,000,000

What Changed From 2025-26

Four changes matter, and together they cut the bill for almost every salaried taxpayer:

• The 23% bracket was cut to 20% (PKR 2.2m–3.2m).
• The 30% bracket was cut to 25% (PKR 3.2m–4.1m).
• The top 35% rate now starts at PKR 7 million instead of PKR 4.1 million, with two new intermediate brackets at 29% and 32% filling the gap.
• The 9% surcharge under section 4AB on taxable income above PKR 10 million was withdrawn for salaried individuals. The top effective marginal rate therefore falls from 38.15% to 35%.

Calculation Example — Salaried Individual

Suppose your annual taxable salary is PKR 2,500,000:

1. First PKR 600,000 — tax: PKR 0
2. Next PKR 600,000 (600,001 to 1,200,000) — tax: 1% x 600,000 = PKR 6,000
3. Next PKR 1,000,000 (1,200,001 to 2,200,000) — tax: 11% x 1,000,000 = PKR 110,000
4. Remaining PKR 300,000 (2,200,001 to 2,500,000) — tax: 20% x 300,000 = PKR 60,000

Total tax: PKR 176,000 — an effective rate of 7.0%.

On the 2025-26 slabs the same salary attracted PKR 255,000, so this taxpayer is PKR 79,000 a year better off. You can run your own figure — and compare any two tax years side by side — with our Pakistan salary tax calculator.

Non-Salaried Individuals (Business) — Tax Slabs 2026-27

These rates apply to individuals whose salary income is 75% or less of their total income — business owners, self-employed professionals, and freelancers. The Finance Act 2026 left these brackets unchanged, so the 2026-27 rates are identical to 2025-26:

• Up to PKR 600,000 — 0%
• PKR 600,001 to PKR 1,200,000 — 15% of the amount exceeding PKR 600,000
• PKR 1,200,001 to PKR 1,600,000 — PKR 90,000 + 20% of the amount exceeding PKR 1,200,000
• PKR 1,600,001 to PKR 3,200,000 — PKR 170,000 + 30% of the amount exceeding PKR 1,600,000
• PKR 3,200,001 to PKR 5,600,000 — PKR 650,000 + 40% of the amount exceeding PKR 3,200,000
• PKR 5,600,001 and above — PKR 1,610,000 + 45% of the amount exceeding PKR 5,600,000

Non-salaried individuals face materially higher rates at every bracket than salaried persons — a deliberate policy to encourage formal employment and documentation of business income. That gap widened in 2026-27, because the salaried slabs were cut while the business slabs were not.

A 10% surcharge under section 4AB still applies to non-salaried individuals and AOPs whose taxable income exceeds PKR 10 million. This is the surcharge that was withdrawn for salaried taxpayers — it remains in force for business income.

Calculation Example — Business Individual

Suppose your annual business income is PKR 2,000,000:

1. First PKR 600,000 — tax: PKR 0
2. Next PKR 600,000 (600,001 to 1,200,000) — tax: 15% x 600,000 = PKR 90,000
3. Remaining PKR 800,000 (1,200,001 to 2,000,000) — tax: 20% x 400,000 + 30% x 400,000 = PKR 200,000

Total tax: PKR 290,000 (effective rate: 14.5%)

Association of Persons (AOPs)

AOPs (partnerships, joint ventures, and unincorporated entities) are taxed at the same rates as non-salaried individuals. However, there are important differences:

• The AOP itself is the taxable entity — not the individual partners
• Profit distribution to partners is not separately taxed (to avoid double taxation)
• If the AOP fails to file a return, each partner may be individually assessed on their share of the AOP income at their applicable individual rates
• An AOP that is a professional firm prohibited from incorporating by law or by the rules of its regulating body (for example, firms of chartered accountants or advocates) is capped at a maximum rate of 40% rather than 45%

Companies — Corporate Tax Rate

This article covers individual and AOP slabs. Corporate rates are summarised below for orientation only — confirm the current year's position against the FBR income tax rate schedules before relying on them:

• Public companies listed on the stock exchange: 29%
• Private companies (not listed): 29%
• Banking companies: 39%
• Small companies (turnover up to PKR 250 million): 20%

Super Tax and the Section 4AB Surcharge — Not the Same Thing

These two charges are routinely confused, including in a lot of published guidance. They are separate:

• Section 4AB surcharge — a surcharge on the tax payable where taxable income exceeds PKR 10 million. For 2026-27 it is 10% for non-salaried individuals and AOPs, and has been withdrawn entirely for salaried individuals.
• Section 4C super tax — a separate levy on high earning persons, applying at tiered rates from 1% to 10% and only biting at much higher income levels (PKR 150 million and above under the current tiers). Sector-specific rates apply to banking, beverages, cement, and other specified sectors.

If you earn PKR 12 million from a business, you are in scope for the section 4AB surcharge — not for super tax. Confusing the two is one of the most common sources of over-provisioning we see in client accounts.

Minimum Tax

Under Section 113, a minimum tax of 1.25% of turnover applies where the tax calculated on taxable income is less than 1.25% of the person's gross turnover. This ensures that even businesses showing losses or minimal profits contribute some tax revenue.

How to Calculate Your Tax

Follow these steps:

1. Determine your total income from all sources (salary, business, property, capital gains, other)
2. Claim allowable deductions (zakat, donations to approved institutions, pension fund contributions)
3. Calculate taxable income (total income minus deductions)
4. Apply the relevant slab based on whether you are salaried or non-salaried
5. Subtract tax credits (if applicable) and adjustable withholding taxes
6. Pay the balance or claim a refund

For a quick estimate, use our Pakistan salary tax calculator — it now carries the 2026-27 slabs alongside every year back to 2022 — or contact us for a precise calculation.

Need Help Filing?

Our income tax team can calculate your exact liability, identify all applicable deductions and credits, and file your return through the FBR IRIS portal. Get in touch for a free consultation.