Complete Guide to FBR Income Tax Slabs 2025-26
Everything you need to know about Pakistan's income tax brackets for salaried employees, business individuals, and AOPs — plus legal tips to reduce your tax bill.
Pakistan’s Federal Board of Revenue (FBR) updated income tax slabs for Tax Year 2025-26 through the Finance Act 2025. Whether you are a salaried professional, a sole proprietor, or part of an Association of Persons (AOP), understanding the correct bracket is the first step to staying compliant and planning your finances effectively.
Note on 2026 data: Tax slabs below reflect the Finance Act 2025 (applicable to Tax Year 2025-26, i.e., income earned July 2025 – June 2026). The Finance Act 2026 (Budget 2026-27) had not been presented at the time of writing. Always verify current slabs at fbr.gov.pk or consult a tax advisor.
Who Pays Income Tax in Pakistan?
Under the Income Tax Ordinance 2001, all resident individuals earning above the exemption threshold are required to file annual tax returns. The key taxpayer categories are:
- Salaried individuals — employees receiving salary income
- Business individuals — sole proprietors, self-employed professionals
- Association of Persons (AOP) — partnerships, joint ventures, Hindu Undivided Families
- Companies — subject to separate corporate tax rates (29% general, 20% for small companies)
Tax Year 2025-26: Salaried Individual Tax Slabs
Salaried persons have traditionally enjoyed lower tax rates compared to business income earners. Below are the slabs applicable for the tax year ending June 30, 2026:
| Annual Taxable Salary (PKR) | Tax Rate |
|---|---|
| Up to 600,000 | 0% (exempt) |
| 600,001 – 1,200,000 | 5% on amount exceeding 600,000 |
| 1,200,001 – 2,200,000 | PKR 30,000 + 15% on amount exceeding 1,200,000 |
| 2,200,001 – 3,200,000 | PKR 180,000 + 25% on amount exceeding 2,200,000 |
| 3,200,001 – 4,100,000 | PKR 430,000 + 30% on amount exceeding 3,200,000 |
| Above 4,100,000 | PKR 700,000 + 35% on amount exceeding 4,100,000 |
Key point: The exemption limit is PKR 600,000 per annum (PKR 50,000 per month). If your gross salary is below this, no income tax is deducted.
Tax Year 2025-26: Business Individual & AOP Tax Slabs
Business income is taxed at slightly higher rates. These slabs also apply to freelancers registered as sole proprietors:
| Annual Taxable Income (PKR) | Tax Rate |
|---|---|
| Up to 600,000 | 0% (exempt) |
| 600,001 – 1,200,000 | 15% on amount exceeding 600,000 |
| 1,200,001 – 1,600,000 | PKR 90,000 + 20% on amount exceeding 1,200,000 |
| 1,600,001 – 3,200,000 | PKR 170,000 + 30% on amount exceeding 1,600,000 |
| 3,200,001 – 5,600,000 | PKR 650,000 + 40% on amount exceeding 3,200,000 |
| Above 5,600,000 | PKR 1,610,000 + 45% on amount exceeding 5,600,000 |
Filer vs. Non-Filer: The Cost of Not Filing
FBR actively differentiates between “Active Taxpayers” (filers) and non-filers. Non-filers face significantly higher withholding tax rates across many transactions:
| Transaction | Filer Rate | Non-Filer Rate |
|---|---|---|
| Cash withdrawal from bank (above PKR 50,000/day) | 0.15% | 0.60% |
| Purchase of property above PKR 5 million | 3% | 6% (or more) |
| Sale of immovable property | 4% | 8% |
| Motor vehicle registration | 1%–3% | 3%–6% |
| Prize winnings | 15% | 30% |
| Dividend income | 15% | 30% |
| Profit on debt (bank profit) | 15% | 30% |
Being an active filer literally saves you money on every major financial transaction. The cost of not filing your return is often far higher than any tax you might owe.
Important Deadlines
| Deadline | Description |
|---|---|
| September 30 (annually) | Last date to file income tax return for individuals and AOPs |
| December 31 (annually) | Last date for companies |
| Monthly 15th | Withholding tax deposit by employers |
| Quarterly | Advance tax payment by business individuals |
Filing after September 30 attracts a default surcharge of 12% per annum on unpaid tax, plus a fixed penalty of PKR 1,000 per month of delay (minimum PKR 10,000).
How to File Your Tax Return
Step 1: Register on IRIS
Visit iris.fbr.gov.pk and create your account using your CNIC. You will receive a password via SMS.
Step 2: Gather Your Documents
- CNIC copy
- Salary slips or Form 16 from employer
- Bank statements for the full year
- Property ownership documents (if applicable)
- Investment certificates (NSS, mutual funds, etc.)
Step 3: Complete the Return
Log into IRIS, select “Income Tax Return” for the relevant tax year, and fill in:
- Salary/business income details
- Deductible allowances
- Wealth statement (mandatory for income above PKR 1 million)
Step 4: Submit and Pay
Once your return is filed and accepted, make any outstanding tax payment via your bank. IRIS also supports online payment through 1-Link and RAAST.
Legal Ways to Reduce Your Tax Liability
1. Claim All Eligible Deductions
- Zakat paid on savings: deductible under Section 60
- Donations to approved charitable institutions: up to 30% of taxable income
- Profit on housing loan for first home: deductible under Section 64A (up to PKR 2 million per year)
- Education expenses for children: some concessions available
2. Invest in Tax-Exempt or Tax-Preferred Instruments
- Voluntary Pension Scheme (VPS): Contributions are deductible up to PKR 500,000 per year (or 20% of income, whichever is lower) under Section 63
- Approved mutual fund investments: Some growth-oriented funds qualify for tax credit
- Life insurance premiums: Deductible under Section 62 (up to PKR 150,000 or 100% of premium, whichever is lower)
3. Declare All Legitimate Business Expenses
If you are self-employed or running a business, ensure all genuine expenses are documented and claimed:
- Office rent, utilities, internet
- Travel and vehicle expenses (proportionate to business use)
- Employee salaries and benefits
4. Use the Salary Tax Calculator
Before your employer deducts tax, verify the calculation yourself using our Salary Slip Generator and Tax Calculator to ensure you are being taxed on the correct amount.
Super Tax (Additional Levy)
Since Finance Act 2022, a Super Tax was introduced on high-income earners. For Tax Year 2025-26:
- Income between PKR 150 million and PKR 200 million: 1% super tax
- Income between PKR 200 million and PKR 250 million: 2% super tax
- Income above PKR 500 million: up to 10% super tax (applicable mainly to banking companies and large corporates)
Most individual salaried and small business taxpayers are not affected by super tax.
Advance Tax for Business Individuals
If your last assessed tax exceeded PKR 1,000, you are required to pay advance tax in quarterly instalments:
- September 25 — 25% of estimated annual tax
- December 25 — 50% (cumulative)
- March 25 — 75% (cumulative)
- June 15 — 100% (cumulative)
Failure to pay advance tax results in a default surcharge on the shortfall.
Key Takeaways
- File your return before September 30 to maintain active filer status
- The exemption threshold is PKR 600,000 per year for both salaried and business individuals
- Non-filer penalties can double your withholding tax on property, vehicles, and banking transactions
- Use VPS contributions and life insurance to legally reduce taxable income
- Use our Tax Calculator and Salary Slip Generator to plan your finances
Being proactive about tax planning is not just about compliance — it is about keeping more of what you earn while contributing your fair share to national development.