How salary tax actually works in Pakistan
The most common misunderstanding about income tax in Pakistan is that your slab rate applies to your whole salary. It does not. The system is progressive, which means your income is sliced into bands and each band is taxed at its own rate. Where a band starts at a given figure, only the income above that figure is charged at that band rate. Everything below it stays taxed at the lower rates it already passed through.
This matters practically. It is why the total in the calculator above is always lower than your top slab rate multiplied by your salary, and it is why crossing into a higher slab can never leave you worse off than you were before. A raise is taxed at your marginal rate. Your existing salary is not retaxed.
Effective rate against marginal rate
These two numbers get used interchangeably in conversation and they mean very different things.
Your marginal rate is the rate that applies to your next rupee of income. It is the rate of the highest slab you reach. It is the number to use when you are deciding whether to take on extra work, negotiate a raise, or move a bonus between tax years.
Your effective rate is your total tax divided by your total income. It is the share of your earnings that actually leaves you. It is always lower than your marginal rate, and it is the honest answer to the question of what percentage of your salary goes to tax.
The calculator shows both, side by side, because quoting only one of them is how people end up with a badly wrong picture of their own finances.
What your employer deducts, and why you still file
If you are salaried, your employer deducts tax at source every month under section 149 of the Income Tax Ordinance 2001 and deposits it against your name. That deduction is an advance payment against your liability for the year. It is not a substitute for filing a return.
Two things routinely go wrong. The first is that your employer can only account for what it knows about, so any income you earn outside your job, and any relief you are entitled to but did not tell payroll about, will not be reflected. The second is that filing is what puts you on the Active Taxpayer List, and being off that list costs you at every point where filer status changes a withholding rate: buying property, registering a vehicle, banking transactions and dividends.
If you want the return handled rather than explained, that is our income tax filing service, at a flat fee for a salaried return.
What this calculator does not yet include
We would rather tell you the limits of a tool than let you find them yourself. This version works from your gross income and the statutory slabs. It does not currently model the reliefs and credits that can change the answer for some people, including the medical allowance exemption, tax credits for approved pension fund contributions and charitable donations, and the reduction available to full time teachers and researchers where that reduction remains in force.
If any of those apply to you, treat the figure above as your starting position rather than your final liability, and check the detail with a consultant. We are adding these inputs, and we will say so on this page when they are live.
Frequently asked
Is the tax rate applied to my whole salary?
No. Each portion of your income is taxed at the rate for the band it falls in, and only the income above a threshold is charged at that band rate. This is why your effective rate is always lower than the headline rate of your top slab.
Does a raise ever leave me worse off?
No. Crossing into a higher slab never reduces your take home pay, because the higher rate applies only to the income above the threshold, not to your salary as a whole.
Does being a filer change my salary tax?
Not the slab rates on salary. Filer status changes withholding on other transactions, such as property, vehicles, banking and dividends, where non filers pay more. Filing your return is what puts you on the Active Taxpayer List.
Which tax year should I pick?
Tax year 2026-27 covers income earned from 1 July 2026 to 30 June 2027, which is the year you are in now. Pick 2025-26 if you are working out a return for the year that ended on 30 June 2026.
Want the return filed, not just calculated?
A salaried return prepared and filed in IRIS by a consultant, with your Active Taxpayer List status confirmed afterwards.
See tax filingGeneral information, not tax advice. Slab tables are taken from the Finance Act that enacted them and the source is shown beneath the calculation. Your own position may differ, particularly if you have income outside salary or are entitled to reliefs this tool does not yet model. Confirm with your tax consultant before acting.