The federal government has introduced new income tax slabs for government employees and the salaried class, effective from July 1, 2026.
The National Assembly has approved the Finance Bill 2026, under which revised tax rates have been set for individuals across different income brackets.
According to the Finance Bill, individuals earning up to Rs600,000 annually will remain completely exempt from income tax. Those with annual incomes between Rs600,000 and Rs1.2 million will be subject to a 1% income tax.
Under the new tax regime, individuals earning between Rs1.2 million and Rs2.2 million annually will pay a fixed tax of Rs6,000, in addition to 11% tax on the amount exceeding Rs1.2 million.
Similarly, those earning between Rs2.2 million and Rs3.2 million annually will pay a fixed tax of Rs116,000 plus 20% tax on the amount exceeding Rs2.2 million. Previously, the applicable rate was 23%.
The Finance Bill further states that individuals earning between Rs3.2 million and Rs4.1 million annually will pay a fixed tax of Rs346,000 along with 25% tax on the excess amount. Those with annual incomes between Rs4.1 million and Rs5.6 million will be liable to pay a fixed tax of Rs541,000 plus 29% tax on the additional income.
Under the revised slabs, individuals earning between Rs5.6 million and Rs7 million annually will pay a fixed tax of Rs976,000 along with 32% tax on income exceeding Rs5.6 million.
For individuals earning more than Rs7 million annually, a fixed tax of Rs1.424 million will apply, in addition to 35% income tax on income above Rs7 million.
All these revised tax rates under Finance Bill 2026 will come into effect from July 1, 2026, and will apply to salaried individuals and government employees.
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