Finance Act 2026
What changed in the Finance Act 2026
For salaried people, the Finance Act 2026 was a tax cut aimed at the middle and upper-middle bands — but only if you earn above about Rs 1,83,000 a month. Here is exactly what changed, and what it is worth at real salaries.
The four changes that matter for salaried people
- The tax-free slice is unchanged: the first Rs 6,00,000 of annual salary is still taxed at nil, and the next slice still costs 1%.
- Middle-band rates were cut: the slice from Rs 22,00,000 to Rs 32,00,000 fell from 23% to 20%, and the slice from Rs 32,00,000 to Rs 41,00,000 fell from 30% to 25%. Two new slices — 29% (Rs 41,00,000–56,00,000) and 32% (Rs 56,00,000–70,00,000) — replaced the old single 35% band.
- The 35% top rate moved up: in 2025-26 it began at Rs 41,00,000 of annual salary; in 2026-27 it begins only above Rs 70,00,000.
- The salaried surcharge is gone: the 9% surcharge (Section 4AB) that 2025-26 charged on the tax of salaried people earning over Rs 1 crore no longer applies to salaried income. It still applies to non-salaried income at 10%.
What that is worth, in rupees
| Salary | Tax 2025-26 (year) | Tax 2026-27 (year) | You save |
|---|---|---|---|
| Rs 1,50,000 / month | Rs 72,000 | Rs 72,000 | Rs 0 (Rs 0 / month) |
| Rs 2,50,000 / month | Rs 3,00,000 | Rs 2,76,000 | Rs 24,000 (Rs 2,000 / month) |
| Rs 5,00,000 / month | Rs 12,81,000 | Rs 11,04,000 | Rs 1,77,000 (Rs 14,750 / month) |
| Rs 10,00,000 / month | Rs 36,85,290 | Rs 31,74,000 | Rs 5,11,290 (Rs 42,608 / month) |
Salaries up to Rs 22,00,000 a year (about Rs 1,83,000 a month) are taxed exactly as before — the savings start above that level and grow with salary, because every cut is in the higher slices.
What did not change
- Non-salaried slabs: the table for business, freelance and AOP income is identical in both years, and its 10% surcharge above Rs 1 crore remains.
- The tax year still runs 1 July to 30 June, and employers still deduct salary tax under Section 149.
Compare your own salary in both years with the salary tax calculator — use the tax-year switch. Tables: 2026-27 slabs · 2025-26 slabs.
Source: Finance Act 2026 amendments to the First Schedule, Part I of the Income Tax Ordinance 2001, as published in the FBR Withholding Income Tax Rate Card FY2026-27 — last checked 4 November 2026.