The federal government has introduced new income tax slabs for salaried individuals under the Finance Bill 2026, with the revised tax structure set to take effect from July 1 after final approval by the National Assembly.

According to the final draft of the Finance Bill, individuals earning up to Rs 0.6 million annually will remain exempt from income tax. The move is aimed at providing relief to lower-income earners while revising tax rates across higher income categories.

Under the new structure, annual income between Rs 0.6 million and Rs 1.2 million will be taxed at 1 percent. Individuals earning between Rs 1.2 million and Rs 2.2 million annually will pay a fixed tax of Rs 6,000 along with 11 percent tax on income exceeding Rs 1.2 million.

For annual incomes ranging from Rs 2.2 million to Rs 3.2 million, a fixed tax of Rs 116,000 will apply, while the additional income will be taxed at 20 percent. This rate has been reduced from the previous 23 percent.

The Finance Bill further proposes a fixed tax of Rs 346,000 plus 25 percent on additional income for those earning between Rs 3.2 million and Rs 4.1 million annually. Individuals earning between Rs 4.1 million and Rs 5.6 million will pay a fixed tax of Rs 541,000 and 29 percent on the excess amount.

Meanwhile, annual incomes between Rs 5.6 million and Rs 7 million will face a fixed tax of Rs 976,000 plus 32 percent on additional earnings. Those earning above Rs 7 million annually will pay a fixed tax of Rs 1.424 million along with 35 percent tax on income exceeding the threshold.

Officials say the revised tax regime is part of broader fiscal reforms aimed at enhancing revenue collection while providing targeted relief to lower and middle-income salaried taxpayers.