Pakistan Salary Tax Slabs 2026: New Income Tax Rates Announced from July 1 for Salaried Class

The government has introduced revised income tax slabs for salaried individuals under the new Finance Bill, which will take effect from July 1, 2026, bringing major changes in tax deductions for different income groups.

According to the final draft of the Finance Bill, the updated structure aims to rationalize tax rates while expanding the tax net and increasing revenue collection from higher-income earners.

Tax Exemption Limit Increased

Under the new proposals, individuals earning up to Rs600,000 per year will remain completely exempt from income tax, providing relief to low-income salaried workers.

Revised Income Tax Slabs (2026–27)

• Up to Rs600,000 annually → Tax exempt
• Rs600,000 – Rs1,200,000 → 1% tax
• Rs1,200,000 – Rs2,200,000 → Rs6,000 fixed + 11% tax on excess amount
• Rs2,200,000 – Rs3,200,000 → Rs116,000 fixed + 20% tax on excess amount (reduced from 23%)
• Rs3,200,000 – Rs4,100,000 → Rs346,000 fixed + 25% tax on excess amount
• Rs4,100,000 – Rs5,600,000 → Rs541,000 fixed + 29% tax on excess amount
• Rs5,600,000 – Rs7,000,000 → Rs976,000 fixed + 32% tax on excess amount
• Above Rs7,000,000 → Rs1,424,000 fixed + 35% tax on excess amount

Key Change: Relief for Middle Income Group

The most notable adjustment is the reduction of the tax rate from 23% to 20% for the Rs2.2 million to Rs3.2 million income bracket, offering some relief to the middle-income salaried class.

Impact on Salaried Class

The revised structure is expected to:

• Provide relief to low-income earners
• Increase tax contribution from high-income groups
• Broaden Pakistan’s tax base
• Align revenue collection with fiscal targets for the upcoming financial year

The Finance Bill is expected to be formally approved by the National Assembly before implementation from July 1.