The Number Nobody Talks About
PKR 605 billion.
That is how much Pakistan’s salaried class paid in income tax in FY 2024-25 — a 55% increase year-on-year, according to FBR data reported by The Express Tribune. Every rupee was deducted at source before it reached a single bank account.
Budget 2026-27, to be presented on June 10, may finally provide meaningful relief. Here is exactly what the current law says, what is being proposed, and what the actual numbers mean for your monthly salary.
What Is Salary Income Tax in Pakistan?
Every salaried employee has income tax deducted monthly by their employer under Section 149 of the Income Tax Ordinance, 2001. Your employer calculates your annual salary, applies the applicable slab, and deducts that tax before the salary reaches your account.
The Finance Act 2025 (for FY 2025-26) already cut salary tax rates significantly — the first slab rate dropped from 5% in FY 2023-24, to 2.5% in FY 2024-25, to 1% in FY 2025-26. Budget 2026-27 may go further.
Current Salary Tax Slabs — FY 2025-26 (Confirmed)
These are the confirmed rates under Finance Act 2025-26, in effect until June 30, 2026.
| Annual Income | Monthly Equivalent | Tax |
|---|---|---|
| Up to PKR 600,000 | Up to PKR 50,000 | 0% — fully exempt |
| PKR 600,001 – 1,200,000 | PKR 50,001 – 100,000 | 1% of amount exceeding PKR 600,000 |
| PKR 1,200,001 – 2,200,000 | PKR 100,001 – 183,333 | PKR 6,000 + 11% of amount exceeding PKR 1,200,000 |
| PKR 2,200,001 – 3,200,000 | PKR 183,334 – 266,667 | PKR 116,000 + 23% of amount exceeding PKR 2,200,000 |
| PKR 3,200,001 – 4,100,000 | PKR 266,668 – 341,667 | PKR 346,000 + 30% of amount exceeding PKR 3,200,000 |
| Above PKR 4,100,000 | Above PKR 341,667 | PKR 616,000 + 35% of amount exceeding PKR 4,100,000 |
Note: A 9% surcharge applies on income above PKR 10,000,000/year, calculated on the tax amount — not the income itself.
Source: Finance Act 2025-26 · FBR Section 149 · ITO 2001 First Schedule Division I
What Is Being Proposed for Budget 2026-27
No rates are officially confirmed for FY 2026-27 as of June 5, 2026. The following are proposals in discussion, reported by Dawn and Business Recorder.
Proposal 1 — Raise the tax-free threshold. The Management Association of Pakistan (MAP) has formally recommended raising the annual exemption threshold from PKR 600,000 to PKR 1,200,000. This would make anyone earning up to PKR 100,000/month fully exempt from income tax. Some reports cite a lower figure of PKR 1,000,000. The final number will be confirmed on June 10.
Proposal 2 — Reduce rates across middle brackets. A reduction in the 11% rate (PKR 1.2M–2.2M band) and the 23% rate (PKR 2.2M–3.2M band) is under discussion, according to Dawn. Exact proposed rates are not confirmed.
Proposal 3 — Phase out the 9% surcharge. The IMF has agreed in principle to a gradual phase-down of the surcharge on high-income earners, per programme documentation cited by Dawn.
Real Calculations — What You Actually Pay Today
If you earn PKR 100,000/month (PKR 1,200,000/year)
Current tax (FY 2025-26):
- First PKR 600,000 → PKR 0
- 1% × PKR 600,000 → PKR 6,000/year
- Monthly deduction: PKR 500/month
If proposed threshold rises to PKR 1,200,000:
- Entire salary exempt → PKR 0/year
- Saving: PKR 6,000/year — PKR 500 extra every month
If you earn PKR 150,000/month (PKR 1,800,000/year)
Current tax (FY 2025-26):
- 1% × PKR 600,000 = PKR 6,000
- 11% × PKR 600,000 (1.2M to 1.8M) = PKR 66,000
- Total: PKR 72,000/year | PKR 6,000/month
If threshold rises to PKR 1,200,000 and 11% rate is also reduced to 8%:
- 8% × PKR 600,000 = PKR 48,000/year | PKR 4,000/month
- Saving: PKR 24,000/year — PKR 2,000 extra every month
If you earn PKR 250,000/month (PKR 3,000,000/year)
Current tax (FY 2025-26):
- PKR 116,000 + 23% × PKR 800,000 = PKR 300,000/year | PKR 25,000/month
This bracket stands to see the largest absolute saving if both threshold and rates move on June 10.
Common Myth — “The Finance Minister Already Cut Taxes”
Yes — but the structural inequity remains. Salaried employees paid PKR 605 billion in FY 2024-25 — a 55% increase year-on-year — while retailers paid a fraction of that despite operating with comparable or higher incomes. Withholding at source leaves salaried workers with no room to underreport, unlike undocumented sectors. Budget 2026-27 is being watched because Finance Minister Muhammad Aurangzeb has publicly stated a desire to provide further relief.
When Does This Matter Most?
July 1, 2026 — New rates take effect from the first payroll of the new tax year. You will see the change in your July salary slip.
September 30, 2026 — Filing deadline for Tax Year 2026. If you overpaid in April–June 2026 under old rates, claim a refund at iris.fbr.gov.pk.
Now — Register on iris.fbr.gov.pk if you are not already an ATL filer. ATL status reduces your withholding on bank transactions, property, and vehicles — that benefit is separate from slab changes and applies immediately.
How to Act — 3 Steps Before June 10
Step 1: Ask your HR or accounts department for your exact monthly WHT deduction. Verify it matches the 1% slab calculation above.
Step 2: On June 10, go directly to fbr.gov.pk and finance.gov.pk for the Finance Bill. Do not rely on social media summaries — read the actual slab table.
Step 3: Register on iris.fbr.gov.pk with your CNIC if not already a filer. Free. Under 30 minutes.
The Bottom Line
Pakistan’s salaried tax rates for FY 2025-26 are already lower than they were two years ago — the first slab dropped from 5% to 1%. What Budget 2026-27 may add is a higher exemption threshold (proposals range from PKR 1,000,000 to PKR 1,200,000) and further reductions on middle brackets. For a PKR 100,000/month earner, the maximum saving if the threshold reaches PKR 1,200,000 is PKR 6,000/year. For mid-income earners in the PKR 150,000–250,000/month range, the saving depends on what rate changes are announced June 10. Follow ClearConcept Academy for a verified breakdown within hours of the Finance Bill being published.
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Sources
- FBR — Federal Board of Revenue — fbr.gov.pk · Section 149, ITO 2001 · Finance Act 2025-26 (confirmed current slabs)
- Dawn — dawn.com · Finance Minister statements on slab relief, Budget 2026-27 proposals
- Business Recorder — brecorder.com · Pre-budget proposals coverage
- The Express Tribune — tribune.com.pk · FBR salary tax collection data (PKR 605 billion, FY 2024-25)
- Management Association of Pakistan (MAP) — Formal budget proposal: threshold raised to PKR 1,200,000
Disclaimer: All figures cited as “current” are confirmed under Finance Act 2025-26 and verified against FBR sources. All figures cited as “proposed” are pre-budget proposals reported by credible sources as of June 5, 2026, and are not confirmed. The actual Federal Budget 2026-27, to be formally presented to the National Assembly on June 10, 2026, may differ materially. ClearConcept Academy does not guarantee the accuracy of pre-budget proposals. Readers are advised to verify all figures against the official Finance Bill 2026 upon publication at fbr.gov.pk and finance.gov.pk.