Islamabad, January 21, 2026 — Salaried persons in Pakistan paid Rs267 billion as income tax during the first half of the current fiscal year 2025-26 (1HFY26), according to provisional figures released by the Federal Board of Revenue (FBR).
The data highlights the growing role of salaried individuals as a key and stable source of government revenue.
The FBR reported that income tax collection from salaried persons increased by 10% compared to the same period of the previous fiscal year, when collections stood at Rs243 billion. This steady rise reflects higher salaries, revisions in pay scales, and improved tax compliance through withholding mechanisms.
Salaried class emerges as major revenue contributor
Tax collected from salaried persons has now become one of the largest components of direct tax revenue for the FBR. Income tax from this segment is collected through withholding at source under Section 149 of the Income Tax Ordinance, 2001, ensuring regular and predictable inflows to the national exchequer.
In December 2025 alone, the FBR collected Rs51 billion from salaried individuals, marking a 12% year-on-year increase compared to Rs45.60 billion collected in December 2024. Officials attributed this growth mainly to salary increases announced by federal and provincial governments in the Budget 2025-26.
Income tax slabs for salaried persons (Tax Year 2025-26)
Under the revised tax regime, where salary income exceeds 75% of total taxable income, the following tax rates apply:
Table 1: Income tax rates for salaried individuals
| S. No. | Taxable Income (Annual) | Rate of Tax |
| 1 | Up to Rs600,000 | 0% |
| 2 | Above Rs600,000 up to Rs1,200,000 | 1% of amount exceeding Rs600,000 |
| 3 | Above Rs1,200,000 up to Rs2,200,000 | Rs6,000 + 11% of amount exceeding Rs1,200,000 |
| 4 | Above Rs2,200,000 up to Rs3,200,000 | Rs116,000 + 23% of amount exceeding Rs2,200,000 |
| 5 | Above Rs3,200,000 up to Rs4,100,000 | Rs346,000 + 30% of amount exceeding Rs3,200,000 |
| 6 | Above Rs4,100,000 | Rs616,000 + 35% of amount exceeding Rs4,100,000 |
The government revised these slabs in Budget 2025-26 with the stated objective of providing relief to lower- and middle-income salaried individuals, while maintaining progressive taxation for higher income brackets.
New pension tax regime introduced in Finance Act 2025
While revising salary tax slabs, the government also introduced a new taxation mechanism for pensioners, ending long-standing exemptions for certain pension incomes.
Table 2: Tax on pension income from former employer
| S. No. | Pension Amount (Annual) | Rate of Tax |
| 1 | Up to Rs10 million | 0% |
| 2 | Above Rs10 million | 5% of amount exceeding Rs10 million |
Key features of pension taxation reforms
• Previously, pension received from a former employer was exempt from tax under clauses (8) and sub-clause (i) of clause (9) of the Income Tax Ordinance.
• Through the Finance Act 2025, these exemptions have been withdrawn, making pension income taxable.
• Under Section 12(2)(f), pension from a former employer is subject to final tax at 5% if:
o Annual pension exceeds Rs10 million, and
o The pensioner is below 70 years of age.
Pensioners exempt from tax
A pension recipient will not be liable to tax if:
• 70 years or more, or
• Annual pension income is below Rs10 million.
Pensioners still in employment
• Pension of individuals who continue working for the same employer or its associate will be taxed at normal slab rates under Division I of Part I of the First Schedule.
• Employers will remain responsible for withholding tax under Section 149 and collecting surcharge under Section 4AB, where applicable, at 9%.
Private and voluntary pensions
• Pensions paid through Voluntary Pension Scheme Rules, 2005, or any pension not received from a former employer, will continue to be taxed under Section 39.
• Commutation of pension, gratuity, and up to 50% of the balance in a pension account will remain exempt from tax, subject to conditions specified in Part I of the Second Schedule of the Ordinance.
The latest figures show that salaried individuals contributed Rs267 billion in income tax during 1HFY26, reinforcing their importance in Pakistan’s tax structure. While revised salary slabs aim to ease the burden on low- and middle-income earners, the newly introduced pension taxation framework signals the government’s broader effort to expand the tax base and enhance revenue sustainability amid rising fiscal pressures.