Income Tax Slab Pakistan 2026 — Updated FBR Tax Rates for Individuals

Salaried employee? Read our complete income tax on salary Pakistan 2026 guide covering exempt allowances, IRIS filing steps, and refund claims.

Income Tax Slabs for Salaried Individuals — Tax Year 2025 Rates

Salaried taxpayers have separate (more favorable) tax slabs compared to business individuals. These rates apply to salary income as defined under Section 12 of the Income Tax Ordinance 2001:

Income Tax Slabs for Business Individuals & AOPs — Tax Year 2025 Rates

Non-salaried individuals (freelancers, sole proprietors, business owners) and Associations of Persons (AOPs) follow slightly different slabs:

Corporate Tax Rate — Companies (Tax Year 2026)

How to Calculate Your Income Tax — Example

Let's calculate tax for a salaried person with annual income of Rs. 2,500,000:

Tax-Exempt Income — What is Not Taxable

• Agricultural income (exempt under provincial laws)
• Gratuity from an approved fund, within Second Schedule limits
• Provident fund contributions and withdrawals (approved funds)
• Scholarships and education grants
• Pension income from approved pension funds
• Foreign remittances received in Pakistan (salary paid in foreign currency and remitted)

Reducing Your Tax — Legal Deductions

When You Have Both Salary and Business Income

Taxpayers with income from more than one category — salary plus rental income, salary plus freelance consulting, or business income plus bank profit — often assume each income type is taxed separately against its own slab, which is incorrect for most combinations. Salary and business/other income generally combine into a single total chargeable income figure, which is then taxed against the applicable progressive slab as a whole, meaning a moderate salary combined with meaningful side income can push the combined total into a noticeably higher bracket than either income source would reach alone. Final-tax categories are the exception — income like bank profit under Section 7B or capital gains on securities that are subject to final withholding tax are generally excluded from this combination and taxed separately at their own fixed rate, not blended into the slab calculation with your salary. Getting this distinction right — which income combines into the slab calculation and which is taxed separately as final tax — is one of the more common sources of an incorrectly self-calculated tax liability, so when income sources are mixed, working through the actual IRIS calculation (or having a consultant verify it) is safer than estimating manually from a slab table alone. A concrete example: a salaried employee earning Rs. 2,000,000 annually sits in the 12.5% bracket, but adding Rs. 800,000 in freelance consulting income on top pushes the combined Rs. 2,800,000 total into the 22.5% bracket for the portion above Rs. 2,200,000 — meaning the freelance income doesn't just get taxed at whatever rate it "would have" alone, it gets taxed at whatever marginal rate applies once it's combined with the salary income already earned that year — a distinction that surprises many people who budget for side income assuming it will be taxed at a lower standalone rate, only to find the actual final tax liability noticeably higher once every income source is properly combined together at annual filing time.

Frequently Asked Questions