Finance Act 2026 enacted · Last reviewed 12 June 2026
Pakistan Budget 2026
salary tax changes.
The Finance Act 2026 delivered the first salaried rate cut in years. Here is exactly what changed for FY 2026-27, the slabs now in force, and what it means for your salary, AOP, and freelancer tax.
Status as of 12 June 2026
The Finance Act 2026 is the law in force. It applies to income earned from 1 July 2026 through 30 June 2027 (tax year 2026-27). The salaried slabs and figures on this page reflect the enacted Act, sourced from the FBR Finance Act and notifications.
Timeline
How Budget 2026-27 became law
The path of the Finance Bill 2026 through the federal budget cycle.
| When | What happened |
|---|---|
| Early June 2026 | Finance Minister presented the Federal Budget 2026-27 to the National Assembly; the Finance Bill 2026 was tabled. |
| June 2026 | Finance Bill debated in the National Assembly and standing committees; salaried-relief measures retained. |
| 30 June 2026 | Finance Act 2026 enacted (President assented to the Finance Bill). |
| 1 July 2026 | New slabs effective for tax year 2026-27. FBR issued SROs/notifications; employer payroll systems apply the new withholding. |
Current law (in force)
Salary tax slabs in force for 2026-27
Set by the Finance Act 2026. These rates apply for FY 2026-27 (1 July 2026 – 30 June 2027).
| Annual income (PKR) | Rate | Tax formula |
|---|---|---|
| Up to ₨600,000 | 0.00% | 0.00% of excess |
| Above ₨600,000 to ₨1,200,000 | 1.00% | 1.00% of excess |
| Above ₨1,200,000 to ₨2,200,000 | 11.00% | ₨6,000 + 11.00% of excess |
| Above ₨2,200,000 to ₨3,200,000 | 20.00% | ₨116,000 + 20.00% of excess |
| Above ₨3,200,000 to ₨4,100,000 | 25.00% | ₨316,000 + 25.00% of excess |
| Above ₨4,100,000 to ₨5,600,000 | 29.00% | ₨541,000 + 29.00% of excess |
| Above ₨5,600,000 to ₨7,000,000 | 32.00% | ₨976,000 + 32.00% of excess |
| Above ₨7,000,000 & above | 35.00% | ₨1,424,000 + 35.00% of excess |
The Finance Act 2026 abolished the salaried surcharge — there is no longer an extra charge on salaried income above PKR 10 million.
What changed
What the Finance Act 2026 changed
The headline changes for salaried taxpayers, versus the Finance Act 2025 (FY 2025-26).
23% bracket cut to 20%
Income between PKR 2.2M and 3.2M is now taxed at 20% instead of 23% — a 3-point cut for upper-middle salaried earners.
30% bracket cut to 25%
Income between PKR 3.2M and 4.1M drops from 30% to 25%, a 5-point cut.
Two new intermediate brackets
The single 35%-above-4.1M band is replaced with a smoother 29% (4.1M–5.6M) and 32% (5.6M–7M) ramp, so the 35% top rate now only bites above PKR 7M.
9% surcharge abolished
The surcharge on salaried income above PKR 10M that the Finance Act 2025 introduced has been scrapped entirely for salaried individuals.
Entry brackets unchanged
Income up to PKR 600,000 stays tax-free, the 600k–1.2M band stays at 1%, and 1.2M–2.2M stays at 11% — so low and middle salaries are unaffected.
AOP & freelancer unchanged
AOP / non-salaried slabs and the Section 154A IT-export regime (0.25% PSEB / 1% non-PSEB) carry forward without change. The relief targeted the salaried class.
Sources
Where these figures come from
We rebuild the calculators against primary sources only — the enacted Finance Act and FBR notifications. No hearsay, no aggregator data.
- Federal Board of Revenue (FBR) — fbr.gov.pk — Finance Act PDFs, SROs, salary withholding tables. The single source of truth for the enacted slabs.
- Ministry of Finance, Government of Pakistan — finance.gov.pk — Federal Budget speech, Budget-in-Brief, Finance Bill text.
- National Assembly of Pakistan — na.gov.pk — Finance Bill 2026 as introduced and as passed into the Finance Act.
- International Monetary Fund — Pakistan EFF — imf.org/en/Countries/PAK — Staff-Level Agreements and Article IV reviews that frame the revenue targets behind the federal budget.
- Pakistan Software Export Board (PSEB) — pseb.org.pk — Status of the 1% / 0.25% concessional regime for IT-export freelancers and registered companies.
Page last reviewed: 12 June 2026Source: Finance Act 2026 (FBR), as enacted.
FAQ
Budget 2026-27 — questions
What did the Pakistan budget for 2026-27 change for salary tax?
The Finance Act 2026 cut salaried rates above PKR 2.2 million (23% → 20% and 30% → 25%), added two new intermediate brackets (29% on 4.1M–5.6M and 32% on 5.6M–7M), moved the 35% top rate to apply only above PKR 7 million, and abolished the 9% surcharge that previously applied to salaried income above PKR 10 million. Income up to PKR 2.2 million is unchanged.
What salary tax rates apply now in 2026-27?
The Finance Act 2026 is in force for tax year 2026-27 (1 July 2026 – 30 June 2027). For salaried individuals: 0% up to PKR 600,000; 1% on 600k–1.2M; 11% on 1.2M–2.2M; 20% on 2.2M–3.2M; 25% on 3.2M–4.1M; 29% on 4.1M–5.6M; 32% on 5.6M–7M; and 35% above 7M. There is no salaried surcharge. AOP / non-salaried rates start at 15% above PKR 600,000.
Did the PKR 600,000 tax-free limit change in 2026-27?
No. The PKR 600,000 annual exemption (PKR 50,000 per month) for salaried individuals carried forward unchanged in the Finance Act 2026, as it has since FY 2022-23. The relief in this budget came from lower rates in the higher brackets and the removal of the surcharge, not from a higher exemption.
Was the 9% surcharge on high salaries removed?
Yes, for salaried individuals. The Finance Act 2026 abolished the 9% surcharge that the Finance Act 2025 levied on salaried taxable income above PKR 10 million. AOP / non-salaried taxpayers still pay a 10% surcharge on their calculated income tax above the same threshold.
Did AOP and freelancer taxes change in 2026-27?
No. The 2026-27 relief was limited to the salaried class. AOP / non-salaried slabs carry forward unchanged (15% from PKR 600k rising to 45% above PKR 5.6M, plus a 10% surcharge above PKR 10M), and the Section 154A IT-export regime remains 0.25% for PSEB-registered exporters and 1% otherwise.
How much will I save under the 2026-27 budget?
Income up to PKR 2.2 million per year sees no change. Above that, savings grow with salary: a PKR 300,000/month salary saves roughly PKR 50,000 a year, a PKR 500,000/month salary saves around PKR 177,000, and high earners above PKR 10 million save even more because the surcharge is gone. See the full breakdown on the comparison page.
See your number
Check your 2026-27 take-home now
Run your salary against the Finance Act 2026 slabs and see your exact annual tax, monthly deduction, and take-home pay.
Open Tax Calculator 2026-27