The federal budget for 2026-27, announced on 12 June 2026, brought something salaried people rarely see: a tax cut. The new slabs apply from 1 July 2026.
What changed
- Tax rates were reduced for annual incomes between Rs 2.2 million and Rs 7 million.
- The number of slabs went from six to eight.
- The 9% surcharge on incomes above Rs 10 million was removed.
- The first three slabs did not change, so anyone earning up to about Rs 183,000 a month pays the same as before.
The new slabs
| Annual taxable salary | Tax for 2026-27 |
|---|---|
| Up to Rs 600,000 | 0% |
| Rs 600,001 to 1,200,000 | 1% of the amount above Rs 600,000 |
| Rs 1,200,001 to 2,200,000 | Rs 6,000 + 11% of the amount above Rs 1,200,000 |
| Rs 2,200,001 to 3,200,000 | Rs 116,000 + 20% of the amount above Rs 2,200,000 |
| Rs 3,200,001 to 4,100,000 | Rs 316,000 + 25% of the amount above Rs 3,200,000 |
| Rs 4,100,001 to 5,600,000 | Rs 541,000 + 29% of the amount above Rs 4,100,000 |
| Rs 5,600,001 to 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 |
How much will you pay?
Here is the tax on some common monthly salaries, compared with last year's rules.
| Monthly salary | Annual tax 2026-27 | Monthly tax | Annual tax 2025-26 | You save |
|---|---|---|---|---|
| Rs 100,000 | Rs 6,000 | Rs 500 | Rs 6,000 | Rs 0 |
| Rs 150,000 | Rs 72,000 | Rs 6,000 | Rs 72,000 | Rs 0 |
| Rs 250,000 | Rs 276,000 | Rs 23,000 | Rs 300,000 | Rs 24,000 |
| Rs 500,000 | Rs 1,104,000 | Rs 92,000 | Rs 1,281,000 | Rs 177,000 |
How to calculate your own tax
Multiply your monthly taxable salary by 12. Find your slab in the table, take its fixed amount and add its percentage of the income above where the slab starts. Divide by 12 for the monthly figure.
For Rs 500,000 a month, annual income is Rs 6,000,000. That falls in the Rs 5.6m to 7m slab, so tax is Rs 976,000 + 32% of Rs 400,000 = Rs 1,104,000 a year, or Rs 92,000 a month. Last year the same salary paid Rs 1,281,000, a saving of Rs 177,000.
Things to keep in mind
Your employer deducts tax every month under section 149 of the Income Tax Ordinance. If your salary changes during the year, the monthly deduction is adjusted so the yearly total is right. These slabs are for salaried people only; freelance and business income are taxed differently.
Want the exact figure for your case?
Calculate your salary tax