Proposed salary slab tax rate for FY2026-27 as Pakistan budget nears

ISLAMABAD – The federal government is considering providing tax relief to the salaried class in the upcoming budget 2026-27. Reports said proposals under review include expanding the number of income tax slabs from six to eight to make the system more progressive. Relief is being considered for individuals earning above Rs183,000 per month, while reductions in tax rates for higher-income groups are also part of the proposals. Under the suggested plan, the tax rate on monthly income up to Rs267,000 could be reduced by 5 percent, bringing it down from 25 percent to 20 percent. Around 400,000 salaried individuals are expected to benefit from this adjustment. Other proposals under consideration include setting a 29 percent tax rate for monthly income up to Rs467,000 and 32 percent for income up to Rs583,000. The maximum tax rate of 35 percent is likely to remain applicable for those earning above Rs583,000 per month, including individuals with annual income exceeding Rs7 million. Monthly Income (PKR) Proposed Tax Rate Up to 267,000 20% Up to 467,000 29% Up to 583,000 32% Above 583,000 35% Annual income above 7 million 35% For very high-income earners, the removal of the additional surcharge on annual income above Rs10 million is also reportedly being considered. Reports said the proposed changes are part of broader efforts to provide relief to the salaried class while maintaining revenue stability.