The federal government has announced significant income tax relief for salaried and business individuals under the Federal Budget 2026-27.
Prime Minister Shehbaz Sharif directed the government to provide tax relief across four income slabs, reducing the burden on salaried individuals earning varying annual incomes.
Salaried individuals earning between Rs220,000 and Rs320,000 annually will now face a reduced income tax rate of 20 percent, down from the previous rate of 23 percent.
Those earning between Rs320,000 and Rs410,000 annually will benefit from a proposed reduction, with the applicable income tax rate cut to 25 percent from the previous 30 percent.
Salaried earners in the Rs410,000 to Rs560,000 income bracket will see their tax rate reduced to 29 percent, offering meaningful financial relief to this segment of the workforce.
For individuals earning between Rs560,000 and Rs700,000 annually, the government has proposed reducing the applicable income tax rate to 32 percent, down from the previous 35 percent.
The government has also announced the complete abolition of the surcharge previously levied on salaried taxpayers, fulfilling a long-standing demand from salaried class representatives and government observers.
The surcharge had been applied at rates ranging up to 7.5 percent on certain income levels, and its full removal was described as a key relief measure for the salaried class.
Regarding the super tax, the government announced the complete elimination of the 6 income slabs covering businesses earning between Rs150 million and Rs500 million annually.
Businesses earning above Rs500 million will now face a reduced super tax rate of 8 percent, down from the previously applicable rate of 10 percent on higher corporate income levels.
