How to Calculate tax on your salary : Pakistan Income Tax Calculator 2026-27

The federal government has proposed income tax relief for salaried individuals across four income slabs in the Finance Bill 2026, offering reduced marginal tax rates and abolishing the surcharge imposed on the salaried class.

Finance Minister Muhammad Aurangzeb announced the measures while presenting the federal budget for fiscal year 2026-27 in the National Assembly, saying the government was aware of the difficulties faced by both government and private salaried individuals.

Under the proposed changes, the marginal tax rate for salaried persons earning between Rs2.2 million and Rs3.2 million annually has been reduced from 23 percent to 20 percent. The proposed tax for this slab will be Rs116,000 plus 20 percent of the amount exceeding Rs2.2 million.

For annual salary income between Rs3.2 million and Rs4.1 million, the marginal tax rate has been reduced from 30 percent to 25 percent. The proposed tax will be Rs316,000 plus 25 percent of the amount exceeding Rs3.2 million.

For salaried individuals earning between Rs4.1 million and Rs5.6 million a year, the marginal rate has been reduced from 35 percent to 29 percent. The proposed tax will be Rs541,000 plus 29 percent of the amount exceeding Rs4.1 million.

For annual salary income between Rs5.6 million and Rs7 million, the marginal rate has been reduced from 35 percent to 32 percent. The proposed tax will be Rs976,000 plus 32 percent of the amount exceeding Rs5.6 million.

The government has also proposed abolishing the surcharge on the salaried class, a move expected to provide additional relief to higher-income salaried taxpayers.

The relief package comes as part of the government's broader budget strategy, which includes a 7 percent increase in salaries and pensions for government employees and tax adjustments aimed at easing pressure on fixed-income groups.

Tax experts said the biggest relief would be felt by salaried individuals falling in the middle and upper-middle income brackets, particularly those earning between Rs3.2 million and Rs5.6 million annually, where marginal tax rates have been reduced more sharply.

The proposed changes will now be debated in parliament as part of the Finance Bill before being approved for implementation in the next fiscal year.