What is the tax-free income threshold in Pakistan?

The tax-free income threshold for salaried individuals is PKR 600,000 per year for the 2026-27 fiscal year. If you earn less than this amount, you pay no Income Tax. If you earn more, only the income above PKR 600,000 is taxed. Use the [Pakistan take-home pay calculator](/tools/finance/take-home-pay-pk) to see your exact tax liability based on your gross salary.

How are Pakistan income tax slabs calculated?

Pakistan uses a progressive tax system with multiple slabs. Each slab applies a different rate to income within that range. For 2026-27, the slabs are: 0% up to PKR 600,000, 5% from PKR 600,001 to PKR 1,200,000, 15% from PKR 1,200,001 to PKR 2,400,000, and so on up to 35% above PKR 10,000,000. The calculator applies each rate only to income within that slab, not your entire salary.

Why is my effective tax rate lower than my top tax bracket?

Your effective tax rate is the average rate you pay on your total income, while your marginal rate is the rate on your last rupee earned. Because Pakistan uses progressive slabs, only the income within each slab is taxed at that rate. A person earning PKR 1,800,000 per year has a marginal rate of 15% but an effective rate of 6.7% because the first PKR 600,000 is tax-free and the next PKR 600,000 is taxed at only 5%.

Do I pay National Insurance or social security in Pakistan?

Pakistan does not have a National Insurance system like the UK. Salaried employees may have provident fund or EOBI (Employees' Old-Age Benefits Institution) contributions deducted, but these are separate from Income Tax. The [take-home pay calculator](/tools/finance/take-home-pay-pk) focuses on Income Tax only. Check with your employer for provident fund and EOBI deduction rates if applicable.

What happens if I have income from multiple sources?

If you have salary income and other income (rental, business, or investment), you must file a tax return and combine all sources to determine your total taxable income. The progressive slabs apply to your combined income, not each source separately. The calculator estimates tax on salary income only. For multiple income sources, consult a tax advisor or use FBR's Iris portal to calculate total tax.

How do I calculate take-home pay if I am paid monthly?

Multiply your monthly gross salary by 12 to get annual gross, enter that into the calculator, then divide the annual net by 12 to get monthly take-home. If you earn PKR 150,000 per month, that is PKR 1,800,000 per year gross. After tax of PKR 120,000 per year, net is PKR 1,680,000 per year, or PKR 140,000 per month.

Are bonuses and allowances taxed differently?

Bonuses and most allowances are added to your gross salary and taxed as part of your total income using the same progressive slabs. However, some allowances may be partially or fully exempt (such as medical allowance or conveyance allowance up to certain limits). Check FBR rules for the current fiscal year to see which allowances qualify for exemption. The calculator assumes all income is taxable unless specified otherwise.

What is the difference between salaried and non-salaried tax rates?

Salaried individuals have a higher tax-free threshold (PKR 600,000) and slightly different slab rates compared to non-salaried individuals (business owners, freelancers). Non-salaried individuals have a lower tax-free threshold (PKR 400,000 for the 2026-27 fiscal year). Use a salaried calculator if you receive a monthly paycheck from an employer. Use a non-salaried or business income calculator if you are self-employed.

Do I need to file a tax return if tax is deducted from my salary?

Yes, if your annual income exceeds the taxable threshold or if you are on the Active Taxpayers List, you must file a tax return even if tax is already deducted by your employer. Filing reconciles what was withheld against what you actually owe. You may get a refund if too much was deducted, or you may owe more if you have other income sources. File through FBR's Iris portal by the annual deadline.

How often do Pakistan tax slabs change?

Tax slabs are typically updated during the annual federal budget announcement, usually in June. Changes take effect from the start of the new fiscal year (July 1). Always use the calculator with the current fiscal year's rates. If the budget introduces new slabs or changes the tax-free threshold, update your calculations to reflect the new rates. The calculator applies 2026-27 rates unless stated otherwise.

Pakistan Take-Home Pay Calculator (FY 2025-26)

Net salary after Income Tax and EOBI for salaried workers, plus a freelancer mode with FBR-aligned slabs.

How does the Pakistan Salary Tax Calculator 2025-26 work step by step?

The [OnSumo Pakistan Take-Home Pay Calculator](/tools/finance/take-home-pay-pk) calculates your net monthly income after Income Tax deductions under Pakistan's tax slab system. You enter your gross monthly or annual salary, and the calculator applies the current tax rates to show what you actually take home. Pakistan uses a progressive tax system with multiple income slabs. The first PKR 600,000 of annual income is tax-free for salaried individuals. Income above that threshold is taxed at rates ranging from 5% to 35% depending on the slab. The calculator applies the tax slabs for the current fiscal year, deducts the applicable tax from your gross income, and shows your net monthly and annual take-home pay. It accounts for the standard tax-free threshold and progressive rates on higher income.

What does a typical Pakistan Salary Tax Calculator 2025-26 result look like?

A salaried employee in Pakistan earns PKR 150,000 per month (PKR 1,800,000 per year). Tax calculation: - First PKR 600,000: tax-free (PKR 0) - Next PKR 600,000 (PKR 600,001 to PKR 1,200,000): 5% = PKR 30,000 - Remaining PKR 600,000 (PKR 1,200,001 to PKR 1,800,000): 15% = PKR 90,000 Total annual tax: PKR 120,000 Monthly tax: PKR 10,000 Take-home pay: PKR 140,000 per month (PKR 1,680,000 per year) The employee keeps 93.3% of gross salary. The effective tax rate is 6.7%, even though the top slab they reach is 15%. This is because only a portion of income is taxed at the higher rate.

Frequently asked questions

What is the tax-free income threshold in Pakistan?
The tax-free income threshold for salaried individuals is PKR 600,000 per year for the 2026-27 fiscal year. If you earn less than this amount, you pay no Income Tax. If you earn more, only the income above PKR 600,000 is taxed. Use the [Pakistan take-home pay calculator](/tools/finance/take-home-pay-pk) to see your exact tax liability based on your gross salary.
How are Pakistan income tax slabs calculated?
Pakistan uses a progressive tax system with multiple slabs. Each slab applies a different rate to income within that range. For 2026-27, the slabs are: 0% up to PKR 600,000, 5% from PKR 600,001 to PKR 1,200,000, 15% from PKR 1,200,001 to PKR 2,400,000, and so on up to 35% above PKR 10,000,000. The calculator applies each rate only to income within that slab, not your entire salary.
Why is my effective tax rate lower than my top tax bracket?
Your effective tax rate is the average rate you pay on your total income, while your marginal rate is the rate on your last rupee earned. Because Pakistan uses progressive slabs, only the income within each slab is taxed at that rate. A person earning PKR 1,800,000 per year has a marginal rate of 15% but an effective rate of 6.7% because the first PKR 600,000 is tax-free and the next PKR 600,000 is taxed at only 5%.
Do I pay National Insurance or social security in Pakistan?
Pakistan does not have a National Insurance system like the UK. Salaried employees may have provident fund or EOBI (Employees' Old-Age Benefits Institution) contributions deducted, but these are separate from Income Tax. The [take-home pay calculator](/tools/finance/take-home-pay-pk) focuses on Income Tax only. Check with your employer for provident fund and EOBI deduction rates if applicable.
What happens if I have income from multiple sources?
If you have salary income and other income (rental, business, or investment), you must file a tax return and combine all sources to determine your total taxable income. The progressive slabs apply to your combined income, not each source separately. The calculator estimates tax on salary income only. For multiple income sources, consult a tax advisor or use FBR's Iris portal to calculate total tax.
How do I calculate take-home pay if I am paid monthly?
Multiply your monthly gross salary by 12 to get annual gross, enter that into the calculator, then divide the annual net by 12 to get monthly take-home. If you earn PKR 150,000 per month, that is PKR 1,800,000 per year gross. After tax of PKR 120,000 per year, net is PKR 1,680,000 per year, or PKR 140,000 per month.
Are bonuses and allowances taxed differently?
Bonuses and most allowances are added to your gross salary and taxed as part of your total income using the same progressive slabs. However, some allowances may be partially or fully exempt (such as medical allowance or conveyance allowance up to certain limits). Check FBR rules for the current fiscal year to see which allowances qualify for exemption. The calculator assumes all income is taxable unless specified otherwise.
What is the difference between salaried and non-salaried tax rates?
Salaried individuals have a higher tax-free threshold (PKR 600,000) and slightly different slab rates compared to non-salaried individuals (business owners, freelancers). Non-salaried individuals have a lower tax-free threshold (PKR 400,000 for the 2026-27 fiscal year). Use a salaried calculator if you receive a monthly paycheck from an employer. Use a non-salaried or business income calculator if you are self-employed.
Do I need to file a tax return if tax is deducted from my salary?
Yes, if your annual income exceeds the taxable threshold or if you are on the Active Taxpayers List, you must file a tax return even if tax is already deducted by your employer. Filing reconciles what was withheld against what you actually owe. You may get a refund if too much was deducted, or you may owe more if you have other income sources. File through FBR's Iris portal by the annual deadline.
How often do Pakistan tax slabs change?
Tax slabs are typically updated during the annual federal budget announcement, usually in June. Changes take effect from the start of the new fiscal year (July 1). Always use the calculator with the current fiscal year's rates. If the budget introduces new slabs or changes the tax-free threshold, update your calculations to reflect the new rates. The calculator applies 2026-27 rates unless stated otherwise.