Compare FY 2025-26 vs FY 2026-27 Tax — Pakistan

Major Changes from FY 2025-26 to FY 2026-27

• Salaried top rate: 35% now starts at Rs. 7M (was Rs. 4.1M) — saving tax for earners in the Rs. 4.1M–7M band
• New salaried brackets: Added at Rs. 5.6M (32%) and Rs. 7M (35%)
• Rate reductions: 23%→20% (Rs. 2.2M–3.2M), 30%→25% (Rs. 3.2M–4.1M), 35%→29% (Rs. 4.1M–5.6M)
• Section 4AB surcharge abolished for salaried individuals in FY 2026-27
• Section 4AB surcharge: removed only for salaried income; the 10% surcharge remains for AOPs and non-salaried individuals above Rs. 10M

Who Benefits Most?

Salaried individuals earning above Rs. 2.2M annually benefit from lower rates. The savings increase significantly above Rs. 3.2M. Income above Rs. 10M also benefits from abolition of the surcharge.

Frequently Asked Questions

What changes between FY 2025-26 and FY 2026-27 for salaried individuals?

FY 2026-27 reduces tax rates at higher slabs: 20% (was 23%), 25% (was 30%), 29% (was 35%), plus adds two new brackets at Rs. 5.6M (32%) and Rs. 7M (35%). The Section 4AB surcharge is abolished for FY 2026-27.

Do AOP/Individual slabs change?

AOP and non-salaried individual slabs use the same rates in both years. The Section 4AB surcharge remains 10% of income tax when taxable income exceeds Rs. 10 million; Finance Act 2026 exempted salaried income only.

Who benefits most from the FY 2026-27 changes?

Salaried individuals earning above Rs. 2.2M annually benefit from lower rates. The savings increase significantly above Rs. 3.2M. Income above Rs. 10M also benefits from abolition of the surcharge.