How to Calculate New 10% Surcharge on High Earners Salaries for 2025

Understanding the Impact on Your Tax Bill (2025 Tax Year)

For the 2025 tax year FBR introduces a new surcharge for high earners. This article explains who is affected, how to calculate the surcharge, and other important details to consider.

Who Needs to Pay the Surcharge?

The 10% income tax surcharge applies to individuals (including salaried individuals) and Associations of Persons (AOPs) whose taxable income for the year exceeds Rs. 10 million. This means if your annual taxable income falls below this threshold, you are not subject to the surcharge.

Calculating Your Surcharge Liability

To calculate your total tax liability under this new system, you’ll need to follow these steps:

1. Calculate Your Regular Income Tax: First, determine your regular income tax liability based on the existing tax slabs for the year 2025.
2. Apply the 10% Surcharge: Once you have your regular income tax amount, multiply it by 10%. This will give you the surcharge amount you need to pay in addition to your regular income tax.

Example Calculation:

Let’s assume you are a salaried individual with an annual income of Rs. 12 million, exceeding the Rs. 10 million threshold. Here’s how to calculate your total tax liability:

• Regular Income Tax (based on existing tax slabs): Rs. 3.4 million
• Surcharge (10% of Regular Tax): Rs. 3.4 million x 10% = Rs. 340,000
• Total Tax Liability: Rs. 3.4 million + Rs. 340,000 = Rs. 3,740,000

Key Points to Remember:

• This surcharge is an annual levy that is added on top of your regular income tax for the 2025 tax year.
• The surcharge effectively increases the total tax burden for high earners in Pakistan.
• It’s important to consult with a tax professional for personalized guidance on calculating your exact tax liability, especially if your tax situation is complex.

Conclusion

The introduction of this surcharge is a significant change for high earners. Understanding how it impacts your tax bill is crucial for accurate tax planning and filing. By following the steps outlined above and consulting with a tax professional if needed, you can ensure you are fulfilling your tax obligations for the 2025 tax year.