How your income tax builds up across each slab.
Total tax (before surcharge)
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Slabs are not a single rate on your whole salary
The most common misread of Pakistani income tax is to find your top slab, multiply your entire income by that rate, and panic. That is not how it works. The system is progressive, meaning each slab rate touches only the slice of income that lands inside that band. Your first PKR 600,000 is always taxed at zero, no matter how much you earn above it. The next slice is taxed at the entry rate, the slice above that at a higher rate, and so on. This calculator exists to make that build-up visible, band by band, instead of leaving you with a single intimidating number.
Pakistan rewrites these bands almost every June through the Finance Act, and the Federal Board of Revenue (FBR) publishes the updated rate card each year. So treat every rate and threshold below as the figure this calculator currently applies, and confirm the live position for your tax year on the FBR website before you file. The progressive structure itself has been stable for years and is safe to plan around.
Salaried versus business and AOP
The tool offers two rate cards because Pakistan taxes the two groups differently. The salaried card, which applies when salary is more than three quarters of your taxable income, is gentler at the bottom: as modelled here, the slice from PKR 600,000 to 1,200,000 is taxed at just 1 percent. The business and AOP card, for sole proprietors, freelancers, and partnerships, starts that same slice at a far steeper rate. If you draw both a salary and business income, the classification rule decides which card you sit on, and it can change your bill substantially.
Following PKR 3 million up the ladder
Take a salaried person with PKR 3 million of annual taxable income, using the rates this calculator applies. The first 600,000 is free. The next 600,000 is taxed at 1 percent, giving PKR 6,000. The 1,000,000 slice from 1.2 million to 2.2 million is taxed at 11 percent, giving PKR 110,000. Income then runs into the 23 percent band, but only the 800,000 between 2.2 million and the 3 million stopping point is taxed, giving PKR 184,000. The slabs above 3.2 million are never reached, so they add nothing.
| Band | Slice taxed | Rate | Tax in band |
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The total comes to PKR 300,000. Notice the effect: the top band that bit was 23 percent, but the total of PKR 300,000 is only 10 percent of the PKR 3 million. That gap between your highest slab and your real average rate is the whole point of progression, and the chart below shows it as a stack.
Who this breakdown is for
This page suits anyone who wants to see the anatomy of their tax rather than just the bottom line: a salaried employee checking a payslip deduction, a freelancer deciding whether the business card hurts more than the salaried card, or a finance student learning how marginal bands stack. One deliberate omission is worth flagging. The tool stops at the slab tax and does not add the surcharge that applies to very high incomes above PKR 10 million, nor any tax credits or allowances you might claim. For the all-in figure including the surcharge, use the full income tax calculator and treat this page as the breakdown behind it.
Why is my average tax rate lower than my top slab?
Because only the income inside your top band is taxed at that rate, while everything below is taxed at the lower band rates or not at all. On the PKR 3 million example, the top slab is 23 percent but the average works out to 10 percent. Your average rate rises toward your top slab only as more of your income piles into that highest band.
Does a small raise that crosses a slab leave me worse off?
No. A raise that pushes you into a higher band is taxed at the new rate only on the rupees above the threshold, not on your whole salary. You always keep more after a raise than before it. The fear of being bumped into a higher bracket and taking home less is a myth under a progressive system like Pakistan's.