Income Tax Calculator 2026-27: New Salary Tax Rates Explained

Finance Minister Muhammad Aurangzeb presented the Federal Budget 2026-27 before the National Assembly on Friday, unveiling new income tax measures aimed at providing relief to salaried individuals.

During the budget session, the finance minister announced that the government plans to reduce tax rates across four income brackets for salaried persons and will also abolish the surcharge currently imposed on their salaries.

According to the proposed changes, individuals earning between Rs2.2 million and Rs3.2 million annually will see their marginal tax rate reduced from 23% to 20%. Under the Finance Bill, such earners will be required to pay Rs116,000 plus 20% of the amount exceeding Rs2.2 million.

For those falling within the Rs3.2 million to Rs4.1 million income bracket, the marginal tax rate is proposed to drop from 30% to 25%. These individuals will pay Rs316,000 plus 25% of their income above Rs3.2 million.

Salaried individuals earning between Rs4.1 million and Rs5.6 million will benefit from a reduction in their tax rate from 35% to 29%, with their tax liability set at Rs541,000 plus 29% of the amount exceeding Rs4.1 million.

Finally, for those earning between Rs5.6 million and Rs7 million annually, the marginal tax rate is proposed to decrease from 35% to 32%. This bracket will pay Rs976,000 plus 32% of the income above Rs5.6 million.