Pakistan Introduces New Income Tax Slabs for Salaried Employees from July 2026

ISLAMABAD: The federal government has introduced new income tax slabs for salaried individuals and government employees, which will come into effect from July 1, 2026, following the approval of the Finance Bill 2026 by the National Assembly.

Under the new tax structure, individuals earning up to Rs600,000 annually will remain completely exempt from income tax.

According to the Finance Bill, those with annual incomes ranging from Rs600,000 to Rs1.2 million will be subject to a 1 percent income tax rate.

For individuals earning between Rs1.2 million and Rs2.2 million per year, a fixed tax of Rs6,000 will apply, in addition to an 11 percent tax on the amount exceeding Rs1.2 million.

Taxpayers with annual incomes between Rs2.2 million and Rs3.2 million will pay a fixed tax of Rs116,000 along with a 20 percent tax on the amount above Rs2.2 million. The previous rate for this category was 23 percent.

The new tax regime further states that individuals earning between Rs3.2 million and Rs4.1 million annually will be charged a fixed tax of Rs346,000 plus 25 percent on the excess amount.

For annual incomes ranging from Rs4.1 million to Rs5.6 million, taxpayers will pay a fixed tax of Rs541,000 along with 29 percent on the amount exceeding Rs4.1 million.

Individuals earning between Rs5.6 million and Rs7 million annually will be required to pay a fixed tax of Rs976,000 in addition to a 32 percent tax on the excess income.

Meanwhile, those earning more than Rs7 million per year will be subject to a fixed tax of Rs1.424 million, along with a 35 percent tax on income exceeding the Rs7 million threshold.

The revised tax slabs are part of the Finance Bill 2026 and will apply to salaried employees and government workers across the country from July 1, 2026.