Understanding your income tax obligations is crucial, especially when new changes are introduced each year. For the fiscal year 2025–26, the Federal Board of Revenue (FBR) has revised the tax slabs for salaried individuals in Pakistan. This article breaks down the updated slabs in simple terms and helps you understand how these changes affect your monthly salary and annual tax return.
What Are Income Tax Slabs?
Income tax slabs are structured ranges that determine how much tax a person owes based on their annual income. In Pakistan, salaried individuals are taxed progressively. This means higher income earners pay a larger percentage in taxes compared to lower-income earners.
Why the Tax Slabs Changed for 2025–26
Every year, the government reviews and adjusts tax policies to match economic goals, inflation, and fiscal needs. For the year 2025–26, the updated tax slabs are part of Pakistan’s ongoing tax reforms aimed at widening the tax base and improving revenue collection. These changes were announced in the federal budget and are applicable from July 1, 2025.
Who Is Considered a Salaried Employee?
Before we dive into the numbers, let’s clarify who these tax slabs apply to. A salaried individual is someone whose primary source of income comes from a fixed monthly salary, whether in the private sector or public service. If more than 50% of your income comes from salary, then FBR classifies you as a salaried person.
New Tax Slabs for Salaried Individuals (2025–26)
The FBR has introduced a slightly adjusted structure for tax slabs this year. Here’s how the income tax brackets look for salaried individuals:
Annual Income and Tax Rate Table
| Annual Taxable Income (PKR) | Tax Rate |
|---|---|
| Up to 600,000 | 0% (No Tax) |
| 600,001 – 1,200,000 | 5% of the amount exceeding 600,000 |
| 1,200,001 – 2,400,000 | PKR 30,000 + 12.5% of the amount exceeding 1,200,000 |
| 2,400,001 – 3,600,000 | PKR 180,000 + 20% of the amount exceeding 2,400,000 |
| 3,600,001 – 6,000,000 | PKR 420,000 + 25% of the amount exceeding 3,600,000 |
| Above 6,000,000 | PKR 1,020,000 + 35% of the amount exceeding 6,000,000 |
Note: These figures are based on official notifications and budget documents. Always confirm with FBR for the most accurate and updated data.
How to Calculate Your Income Tax (Example)
Let’s say your annual salary is PKR 2,000,000. Here’s how your tax would be calculated using the 2025–26 slabs:
- First 600,000: No tax
- Next 600,000 (600,001 – 1,200,000): 5% = PKR 30,000
- Remaining 800,000 (1,200,001 – 2,000,000): 12.5% = PKR 100,000
- Total Tax = PKR 30,000 + PKR 100,000 = PKR 130,000
This results in an effective tax rate of 6.5% on your total income.
Monthly Deduction: What Will Change?
Your employer deducts income tax each month from your salary. Based on the example above, PKR 130,000 annually means about PKR 10,833 per month will be deducted. If your income changes during the year, these deductions can be adjusted.
Key Points to Remember
1. File Your Tax Returns
Even if your employer deducts tax from your salary, you must file your tax return annually. Failing to do so can result in fines or loss of filer status.
2. Become an Active Filer
Make sure your name appears on FBR’s Active Taxpayer List (ATL). Filers enjoy benefits such as lower withholding tax on bank transactions and vehicle registration.
3. Declare All Income Sources
If you have side income like freelancing or rental income, declare it honestly. The FBR now has stronger tools to track undeclared income.
Common Questions from Salaried Individuals
Q. Do I need to file tax if my salary is under PKR 600,000?
No, if your annual salary is under PKR 600,000 and you have no other source of income, you’re not required to pay income tax. However, it’s still good practice to file a return for record-keeping and to appear on the ATL.
Q. Will these tax rates change mid-year?
Normally, FBR announces tax slabs in the federal budget and applies them from July 1. Mid-year changes are rare unless an emergency economic measure is announced.
How to File Your Tax Returns Easily
Filing your tax return is now easier than ever. Here’s a quick guide:
Step 1 – Register on IRIS Portal
Go to https://iris.fbr.gov.pk and create an account using your CNIC.
Step 2 – Gather Salary Certificate
Ask your HR department for your annual salary certificate, which outlines your income and deductions.
Step 3 – Fill Out Income and Deduction Details
Use the provided fields on the IRIS portal to declare your income, taxes paid, and any deductions like Zakat or donations.
Step 4 – Review and Submit
Double-check the data before submitting. You will receive a confirmation email once filed successfully.
Benefits of Being a Tax Filer
Being a tax filer in Pakistan comes with a variety of advantages:
- Lower tax rates on vehicle purchases
- Lower withholding tax on bank transactions
- Easier access to loans and visas
- Stronger financial credibility
Final Thoughts
The revised tax slabs for 2025–26 might not be a major overhaul, but even small changes can significantly affect your take-home pay. Staying informed and proactive ensures you meet your obligations without last-minute surprises.
Understanding tax rules doesn’t have to be complicated. Use this guide to stay compliant, maximize benefits, and plan your finances better throughout the year.
