Budget 2025-26; How to Calculate Tax on Your Salary Under New Slabs

The government of Pakistan has announced revised income tax slabs for salaried individuals in the Budget 2025-26, effective July 1, 2025. These updates impact employees based on their annual income.

New Tax Slabs for Salaried Individuals

The Federal Board of Revenue (FBR) has introduced the following tax rates:

• Up to Rs.600,000/year (Rs.50,000/month) – 0% tax
• Rs.600,001–1,200,000/year (Rs.50,001–100,000/month) – 5% tax on the amount exceeding Rs.600,000
• Rs.1,200,001–2,200,000/year (Rs.100,001–183,333/month) – Rs.30,000 plus 15% on the amount exceeding Rs.1,200,000
• Rs.2,200,001–3,200,000/year (Rs.183,334–266,666/month) – Rs.180,000 plus 25% on the amount exceeding Rs.2,200,000
• Rs.3,200,001–4,100,000/year (Rs.266,667–341,666/month) – Rs.430,000 plus 30% on the amount exceeding Rs.3,200,000
• Above Rs.4,100,000/year (Above Rs.341,666/month) – Rs.700,000 plus 35% on the amount exceeding Rs.4,100,000

How to Calculate Your Tax

To determine your tax liability, follow these steps:

1. Check your annual salary – Identify your total taxable income before deductions.
2. Find your tax bracket – Compare your earnings with the new slabs.
3. Apply the correct tax rate – Use the corresponding tax formula.
4. Subtract exemptions – Deduct any eligible tax relief or allowances.

Example Calculation

For someone earning Rs.1,500,000 per year:

• First Rs.600,000 – No tax
• Next Rs.600,000 – 5% tax = Rs.30,000
• Remaining Rs.300,000 – 15% tax = Rs.45,000
• Total tax payable = Rs.75,000 annually

Tax Relief and Salary Adjustments

The budget provides tax relief to lower-income earners. The government has also announced a 10% salary increase for government employees, helping them cope with rising expenses.

Online Tax Calculator

Pakistan’s salaried individuals can use online tax calculators to compute their exact tax payable. Websites like Tax Calculator Pakistan provide automated calculations based on updated tax slabs.

Final Thoughts

The Budget 2025-26 ensures a fair taxation system, benefiting salaried individuals with clearer tax slabs. Employees can now calculate their tax easily and plan their finances for the upcoming fiscal year.

For more details, visit the official FBR website or try an online tax calculator.