FY 2025-26 vs Proposed Budget 2026-27 Salary Tax Slabs
A detailed bracket-by-bracket comparison highlighting rate cuts across middle-income tiers (23% → 20%, 30% → 25%, 35% → 29%) and the complete abolition of the 9% surcharge for salaried taxpayers.
Bracket-by-Bracket Salaried Tax Rate Comparison
| Annual Taxable Salary Bracket | FY 2025–26 (Active Slabs) | FY 2026–27 (Proposed Budget) | Tax Relief Delta |
|---|---|---|---|
| Up to PKR 600,000 | 0% (Exempt) | 0% (Exempt) | No change (0% tax) |
| PKR 600,001 to 1,200,000 | 1% of amount > 600k | 1% of amount > 600k | Unchanged (Max Rs 6,000) |
| PKR 1,200,001 to 2,200,000 | Rs 6,000 + 11% > 1.2M | Rs 6,000 + 11% > 1.2M | Unchanged (Max Rs 116,000) |
| PKR 2,200,001 to 3,200,000 | Rs 116,000 + 23% > 2.2M | Rs 116,000 + 20% > 2.2M | 3% Rate Cut (Save up to Rs 30k/yr) |
| PKR 3,200,001 to 4,100,000 | Rs 346,000 + 30% > 3.2M | Rs 316,000 + 25% > 3.2M | 5% Rate Cut + Base Fee Cut (Save up to Rs 75k/yr) |
| PKR 4,100,001 to 5,600,000 | Rs 616,000 + 35% > 4.1M | Rs 541,000 + 29% > 4.1M | 6% Rate Cut + Base Fee Cut (Substantial relief) |
| PKR 5,600,001 to 7,000,000 | Rs 616,000 + 35% > 4.1M | Rs 976,000 + 32% > 5.6M | 3% Rate Cut on upper-middle tier |
| Above PKR 7,000,000 | Rs 616,000 + 35% > 4.1M | Rs 1,424,000 + 35% > 7.0M | 35% Top Rate Retained |
| Income Surcharge (Section 4AB) Income exceeding PKR 10 Million (1 Crore) | 9% Surcharge on computed tax liability | 0% (Abolished completely for salaried) | 100% Surcharge Removal |
Monthly Salary Take-Home Relief Impact
| Gross Monthly Salary | FY 2025–26 Monthly Tax | FY 2026–27 Monthly Tax | Monthly Take-Home Relief |
|---|---|---|---|
| PKR 150,000 / month | PKR 6,000 / mo | PKR 6,000 / mo | Rs 0 / month (No change) |
| PKR 250,000 / month | PKR 25,000 / mo | PKR 23,000 / mo | + PKR 2,000 / month (+Rs 24,000/yr) |
| PKR 300,000 / month | PKR 38,833 / mo | PKR 34,667 / mo | + PKR 4,167 / month (+Rs 50,000/yr) |
| PKR 400,000 / month | PKR 71,750 / mo | PKR 62,000 / mo | + PKR 9,750 / month (+Rs 117,000/yr) |
| PKR 600,000 / month | PKR 141,750 / mo | PKR 124,000 / mo | + PKR 17,750 / month (+Rs 213,000/yr) |
Key Takeaways from the Proposed Budget 2026-27
1. Relief for Middle & Upper-Middle Income Earners
The primary focus of the proposed Budget 2026-27 salary tax adjustments is providing tangible relief to salaried professionals earning between PKR 2.2 Million and PKR 7 Million per year. By reducing marginal tax rates from 23% down to 20% in Slab 4 and 30% down to 25% in Slab 5, monthly tax withholding for middle management and senior technical staff is reduced significantly.
2. Abolition of 9% Surcharge on Salaried Class
Under FY 2025-26, high-earning individuals with taxable income exceeding PKR 10 Million (1 Crore) were subjected to an additional 9% surcharge on top of their computed tax liability. In Budget 2026-27, this surcharge is completely abolished for salaried individuals, preventing compounding effective tax rates on senior executives and directors.
3. Restructuring of the 35% Top Bracket
Rather than applying a blanket 35% marginal rate on all income exceeding PKR 4.1 Million (as in FY 2025-26), the proposed budget creates smoother progressive tiers: 29% between PKR 4.1M and 5.6M, 32% between PKR 5.6M and 7.0M, and reserves the 35% rate only for annual taxable earnings above PKR 7.0 Million.
Frequently Asked Questions
What are the major salary tax changes in Proposed Budget 2026-27?
Budget 2026-27 introduces tax cuts across salaried brackets: reducing the 23% rate to 20% (Rs 2.2M–3.2M), the 30% rate to 25% (Rs 3.2M–4.1M), splitting the 35% tier into 29% (Rs 4.1M–5.6M), 32% (Rs 5.6M–7M), and 35% (above Rs 7M), and completely abolishing the 9% surcharge on salaried income exceeding Rs 10 Million.
When do the FY 2026-27 proposed salary tax rates take effect?
The proposed Finance Bill 2026 tax slabs take effect on July 1, 2026 upon formal passage of the Finance Act 2026 by Parliament, applying to payroll deductions for the 2026–27 fiscal year.
How much will a salaried individual earning Rs. 300,000 per month save under Budget 2026-27?
For an annual salary of PKR 3.6 Million (Rs 300k/month), FY 2025-26 tax is PKR 466,000/year. Under FY 2026-27 proposed slabs, tax decreases to PKR 416,000/year, delivering an annual tax saving of PKR 50,000 (Rs 4,167/month).
Is the 9% tax surcharge abolished for non-salaried business individuals too?
No. The abolition of the 9% surcharge on income above PKR 10 Million is restricted to salaried taxpayers in the Budget 2026-27 proposals. Non-salaried individuals and business entities retain the 9% surcharge under Section 4AB.