Income Tax Slabs FY 2026-27: New vs Old Regime Rates
Income Tax Slabs for FY 2025-26 and FY 2026-27: Everything You Need to Know
Understanding income tax slabs is the starting point for every tax planning decision. Whether you are calculating your take-home salary, deciding between the old and new regime, or figuring out how much TDS your employer should deduct, the slab rates are the foundation of it all.
This guide covers the complete income tax slab structure for both FY 2025-26 (AY 2026-27) and FY 2026-27 (AY 2027-28), with actual tax calculations at different salary levels, surcharge details, and a clear answer to the most common question: which regime saves more at your income level.
Budget 2026 Update: Finance Minister Nirmala Sitharaman made no changes to income tax slabs in Budget 2026. The slab rates for FY 2026-27 are identical to FY 2025-26. Additionally, the new Income Tax Act 2025 comes into effect from 1 April 2026, replacing the Income Tax Act 1961, but with no change in slab rates or deduction limits.
New Tax Regime Slabs: FY 2025-26 and FY 2026-27
The new tax regime is the default regime from FY 2023-24 onwards. If you do not actively choose a regime, this is what applies to you automatically.
| Income Range | Tax Rate | Tax on This Slab |
|---|---|---|
| Up to Rs. 4,00,000 | Nil | Rs. 0 |
| Rs. 4,00,001 to Rs. 8,00,000 | 5% | Up to Rs. 20,000 |
| Rs. 8,00,001 to Rs. 12,00,000 | 10% | Up to Rs. 40,000 |
| Rs. 12,00,001 to Rs. 16,00,000 | 15% | Up to Rs. 60,000 |
| Rs. 16,00,001 to Rs. 20,00,000 | 20% | Up to Rs. 80,000 |
| Rs. 20,00,001 to Rs. 24,00,000 | 25% | Up to Rs. 1,00,000 |
| Above Rs. 24,00,000 | 30% | 30% on amount above Rs. 24 lakh |
Key benefit: Under the new regime, income up to Rs. 12,00,000 is effectively tax-free due to the rebate under Section 87A (Rs. 60,000 rebate). For salaried professionals, this limit extends to Rs. 12,75,000 after the Rs. 75,000 standard deduction.
Old Tax Regime Slabs: FY 2025-26 and FY 2026-27
The old tax regime has simpler slab structure but fewer slabs and higher rates. Its advantage comes from the large number of deductions available.
For individuals below 60 years:
| Income Range | Tax Rate |
|---|---|
| Up to Rs. 2,50,000 | Nil |
| Rs. 2,50,001 to Rs. 5,00,000 | 5% |
| Rs. 5,00,001 to Rs. 10,00,000 | 20% |
| Above Rs. 10,00,000 | 30% |
For Senior Citizens (60 to 79 years):
| Income Range | Tax Rate |
|---|---|
| Up to Rs. 3,00,000 | Nil |
| Rs. 3,00,001 to Rs. 5,00,000 | 5% |
| Rs. 5,00,001 to Rs. 10,00,000 | 20% |
| Above Rs. 10,00,000 | 30% |
For Super Senior Citizens (80 years and above):
| Income Range | Tax Rate |
|---|---|
| Up to Rs. 5,00,000 | Nil |
| Rs. 5,00,001 to Rs. 10,00,000 | 20% |
| Above Rs. 10,00,000 | 30% |
Under the old regime, individuals with income up to Rs. 5,00,000 pay zero tax due to the Section 87A rebate of Rs. 12,500.
Note that the old regime offers senior citizens a higher basic exemption limit, which is one reason many retirees still prefer it. For a detailed comparison of which regime works better at your income level, read the old vs new tax regime guide.
Standard Deduction: Both Regimes
| Regime | Standard Deduction |
|---|---|
| New Tax Regime | Rs. 75,000 |
| Old Tax Regime | Rs. 50,000 |
Standard deduction is available to all salaried employees and pensioners automatically. No proof or investment required. Learn more about standard deduction for salaried individuals.
Section 87A Rebate: Zero Tax Limit Explained
Many professionals confuse the basic exemption limit with the zero tax limit. They are different things.
| Regime | Basic Exemption Limit | Rebate under 87A | Effective Zero Tax Limit |
|---|---|---|---|
| New Tax Regime | Rs. 4,00,000 | Rs. 60,000 (for income up to Rs. 12L) | Rs. 12,00,000 |
| Old Tax Regime | Rs. 2,50,000 | Rs. 12,500 (for income up to Rs. 5L) | Rs. 5,00,000 |
Important: The Section 87A rebate applies only to regular income. Special rate incomes like Long Term Capital Gains under Section 112A are not eligible for this rebate from FY 2026-27 onwards.
For salaried professionals in the new regime, the effective zero tax salary is Rs. 12,75,000 (Rs. 12,00,000 plus Rs. 75,000 standard deduction).
Actual Tax Calculation: Real Salary Examples
Numbers make this clearest. Here is exactly how much tax you pay at different income levels under both regimes.
Salary: Rs. 8,00,000 per year
| Step | New Regime | Old Regime (with deductions) |
|---|---|---|
| Gross Salary | Rs. 8,00,000 | Rs. 8,00,000 |
| Standard Deduction | Rs. 75,000 | Rs. 50,000 |
| 80C + 80D + HRA | Not available | Rs. 2,35,000 |
| Taxable Income | Rs. 7,25,000 | Rs. 5,15,000 |
| Tax before cess | Rs. 15,625 | Rs. 13,000 |
| Cess at 4% | Rs. 625 | Rs. 520 |
| Total Tax | Rs. 16,250 | Rs. 13,520 |
Salary: Rs. 12,00,000 per year
| Step | New Regime | Old Regime (with deductions) |
|---|---|---|
| Gross Salary | Rs. 12,00,000 | Rs. 12,00,000 |
| Standard Deduction | Rs. 75,000 | Rs. 50,000 |
| 80C + 80D + HRA | Not available | Rs. 3,00,000 |
| Taxable Income | Rs. 11,25,000 | Rs. 8,50,000 |
| Tax before cess | Rs. 0 (87A rebate applies) | Rs. 75,000 |
| Cess at 4% | Rs. 0 | Rs. 3,000 |
| Total Tax | Rs. 0 | Rs. 78,000 |
This is the most powerful example. At Rs. 12 lakh gross salary, a salaried professional in the new regime pays zero tax. The old regime, even with full deductions, results in Rs. 78,000 tax.
Salary: Rs. 15,00,000 per year
| Step | New Regime | Old Regime (with full deductions) |
|---|---|---|
| Gross Salary | Rs. 15,00,000 | Rs. 15,00,000 |
| Standard Deduction | Rs. 75,000 | Rs. 50,000 |
| 80C + 80D + HRA + Home Loan | Not available | Rs. 4,95,000 |
| Taxable Income | Rs. 14,25,000 | Rs. 9,55,000 |
| Tax before cess | Rs. 1,48,750 | Rs. 1,12,500 |
| Cess at 4% | Rs. 5,950 | Rs. 4,500 |
| Total Tax | Rs. 1,54,700 | Rs. 1,17,000 |
At Rs. 15 lakh with full deductions, old regime saves Rs. 37,700 over new regime.
Salary: Rs. 20,00,000 per year
| Step | New Regime | Old Regime (with full deductions) |
|---|---|---|
| Gross Salary | Rs. 20,00,000 | Rs. 20,00,000 |
| Standard Deduction | Rs. 75,000 | Rs. 50,000 |
| 80C + 80D + HRA + Home Loan | Not available | Rs. 5,50,000 |
| Taxable Income | Rs. 19,25,000 | Rs. 14,00,000 |
| Tax before cess | Rs. 3,31,250 | Rs. 2,70,000 |
| Cess at 4% | Rs. 13,250 | Rs. 10,800 |
| Total Tax | Rs. 3,44,500 | Rs. 2,80,800 |
At Rs. 20 lakh with full deductions, old regime saves Rs. 63,700 annually.
Surcharge: Who Pays Extra and How Much
Surcharge is an additional tax on top of your calculated income tax. It applies only to high income earners. Many professionals in the Rs. 50 lakh and above bracket do not account for surcharge in their tax planning.
| Income Range | Surcharge Rate |
|---|---|
| Up to Rs. 50,00,000 | Nil |
| Rs. 50,00,001 to Rs. 1,00,00,000 | 10% of income tax |
| Rs. 1,00,00,001 to Rs. 2,00,00,000 | 15% of income tax |
| Rs. 2,00,00,001 to Rs. 5,00,00,000 | 25% of income tax |
| Above Rs. 5,00,00,000 | 25% of income tax (new regime) / 37% (old regime) |
Important: Under the new tax regime, the highest surcharge rate is capped at 25%. Under the old regime, it goes up to 37% for income above Rs. 5 crore. This makes the new regime more attractive for very high earners.
After surcharge, add 4% Health and Education Cess on the total of income tax plus surcharge.
Health and Education Cess
Cess is charged at 4% on total income tax plus surcharge under both regimes. There is no exemption from cess, and it applies to all taxpayers regardless of income level.
Example: If your income tax is Rs. 1,00,000 and surcharge is nil, your cess is Rs. 4,000. Total tax payable is Rs. 1,04,000.
Income Tax Slabs for Special Categories
NRIs (Non-Resident Indians)
NRIs are taxed on income earned in India. Under the new tax regime, NRIs follow the same slab rates as resident individuals. However, NRIs are not eligible for the Section 87A rebate. This means NRIs pay tax from the first rupee of taxable income, even if it is below Rs. 12 lakh.
HUFs (Hindu Undivided Families)
HUFs can also choose between old and new tax regimes. The slab rates are the same as individual taxpayers. The basic exemption limit under the old regime for HUFs is Rs. 2,50,000 (same as individuals below 60 years, no higher limit like senior citizens).
Partnership Firms and Companies
Partnership firms are taxed at a flat rate of 30% on total income (plus applicable surcharge and cess). The slab system does not apply to firms and companies.
How Income Tax Is Calculated: Step-by-Step Process
Here is the exact sequence to calculate your tax liability correctly:
- Calculate Gross Total Income:Â Add salary, house property income, capital gains, business income, and other sources.
- Apply Exemptions: Under old regime, subtract HRA exemption, LTA, and other Section 10 exemptions from salary. Use our HRA Calculator to find your exact HRA exemption.
- Apply Deductions: Under old regime, subtract standard deduction (Rs. 50,000), Section 80C (up to Rs. 1,50,000), Section 80D, and other deductions. Read the complete Section 80C deductions guide to ensure you are claiming everything eligible.
- Arrive at Taxable Income:Â Gross Total Income minus exemptions minus deductions.
- Apply Slab Rates:Â Calculate tax using the applicable slab table above.
- Apply Section 87A Rebate:Â If eligible (income up to Rs. 12L in new regime or Rs. 5L in old regime), reduce tax to zero.
- Add Surcharge:Â If income exceeds Rs. 50 lakh, apply applicable surcharge rate.
- Add Cess:Â 4% on tax plus surcharge.
- Deduct TDS and Advance Tax: Subtract any tax already paid via TDS or advance tax to find net payable or refund.
Key Changes Under the New Income Tax Act 2025
From 1 April 2026, the Income Tax Act 2025 replaces the Income Tax Act 1961. While slab rates remain unchanged, here are the key changes that affect salaried professionals:
- Revised return deadline extended:Â You can now file a revised ITR up to 31 March (previously 31 December), but a fee will be charged for late revised returns
- New ITR forms:Â Fresh ITR forms will be introduced under the new Act
- Section renumbering:Â Section 80C becomes Section 123, Section 80D becomes Section 124, and so on. The benefits remain the same, only the numbers change
- Form 15G and 15H:Â Can now be submitted with depositories to reduce TDS on dividends and interest
- TAN not mandatory:Â For TDS on property transactions involving NRIs, TAN is no longer required
For FY 2025-26 returns (filed in 2026), you will still reference the old Act sections. The new section numbers apply from FY 2026-27 returns onwards.
Which Tax Regime Should You Choose Based on Slabs Alone?
Looking purely at slab rates without considering deductions:
| Income Level | New Regime Tax | Old Regime Tax | Slab Advantage |
|---|---|---|---|
| Rs. 5,00,000 | Rs. 0 (rebate) | Rs. 0 (rebate) | Equal |
| Rs. 8,00,000 | Rs. 41,600 | Rs. 75,400 | New regime better |
| Rs. 12,00,000 | Rs. 0 (rebate) | Rs. 1,31,040 | New regime much better |
| Rs. 15,00,000 | Rs. 1,54,700 | Rs. 1,95,000 | New regime better |
| Rs. 20,00,000 | Rs. 3,44,500 | Rs. 3,51,000 | New regime slightly better |
| Rs. 30,00,000 | Rs. 6,24,000 | Rs. 6,24,000 | Equal (approx) |
However, deductions completely change this picture. With full Section 80C, HRA, and home loan deductions, the old regime becomes more attractive at higher income levels. This is why the decision cannot be made on slab rates alone. Always calculate both regimes with your actual deductions before deciding.
For a complete comparison with real deduction scenarios, read the old vs new tax regime comparison.
Income Tax Slabs vs Effective Tax Rate
One thing most guides do not explain: the slab rate is not your effective tax rate. The slab rate is the marginal rate on the last rupee earned. Your effective tax rate is always lower.
Example: If your taxable income is Rs. 15,00,000 under the new regime, you do not pay 20% on the entire Rs. 15 lakh. You pay:
- 0% on first Rs. 4 lakh = Rs. 0
- 5% on next Rs. 4 lakh = Rs. 20,000
- 10% on next Rs. 4 lakh = Rs. 40,000
- 15% on remaining Rs. 3 lakh = Rs. 45,000
- Total tax = Rs. 1,05,000 (before cess)
- Effective tax rate = Rs. 1,05,000 divided by Rs. 15,00,000 = 7%
Your marginal rate is 15% (the slab you fall in) but your effective rate is only 7%. This distinction matters when evaluating whether a salary hike is “worth it” after taxes.
Frequently Asked Questions on Income Tax Slabs
What are the income tax slabs for FY 2026-27?
The income tax slabs for FY 2026-27 are unchanged from FY 2025-26. Under the new regime: 0% up to Rs. 4 lakh, 5% from Rs. 4 to 8 lakh, 10% from Rs. 8 to 12 lakh, 15% from Rs. 12 to 16 lakh, 20% from Rs. 16 to 20 lakh, 25% from Rs. 20 to 24 lakh, and 30% above Rs. 24 lakh. Budget 2026 made no changes to these rates.
Is income up to Rs. 12 lakh tax-free in FY 2026-27?
Yes, for resident individuals under the new tax regime. The Section 87A rebate of Rs. 60,000 ensures zero tax liability for taxable income up to Rs. 12 lakh. For salaried professionals, after the Rs. 75,000 standard deduction, gross salary up to Rs. 12,75,000 is effectively tax-free.
Are income tax slabs different for senior citizens in the new regime?
No. Under the new tax regime, the same slab rates apply to all age groups including senior and super senior citizens. The age-based higher exemption limits exist only under the old tax regime.
What is the income tax on Rs. 10 lakh salary in FY 2026-27?
Under the new regime, taxable income after standard deduction is Rs. 9,25,000. Tax calculation: 5% on Rs. 4 lakh to 8 lakh = Rs. 20,000, plus 10% on Rs. 8 lakh to 9.25 lakh = Rs. 12,500. Total tax = Rs. 32,500 plus 4% cess = Rs. 33,800 approximately. Under the old regime with deductions, it can be significantly lower or even zero depending on investments.
What is the surcharge on income above Rs. 50 lakh?
For income between Rs. 50 lakh and Rs. 1 crore, surcharge is 10% of income tax. From Rs. 1 crore to Rs. 2 crore, it is 15%. From Rs. 2 crore to Rs. 5 crore, it is 25%. Above Rs. 5 crore, it is 25% under new regime and 37% under old regime.
Do NRIs get the Rs. 12 lakh zero tax benefit?
No. The Section 87A rebate is available only to resident individuals. NRIs pay tax from the first rupee of taxable income in India, using the same slab rates but without the rebate benefit.
Has the Income Tax Act 2025 changed the slab rates?
No. The Income Tax Act 2025, effective from 1 April 2026, reorganises and simplifies the tax law but does not change slab rates, deduction limits, or rebate amounts. Section numbers have changed (example: 80C becomes Section 123) but the benefits remain identical.
Which ITR form should I file for FY 2025-26?
The ITR form depends on your income sources, not the tax regime. Read the complete guide on types of income tax returns to identify the right form for your situation.
Summary: Key Numbers to Remember
| Item | New Regime | Old Regime |
|---|---|---|
| Basic Exemption Limit | Rs. 4,00,000 | Rs. 2,50,000 (Rs. 3L for seniors, Rs. 5L for super seniors) |
| Standard Deduction | Rs. 75,000 | Rs. 50,000 |
| Zero Tax Limit (87A rebate) | Rs. 12,00,000 | Rs. 5,00,000 |
| Effective Zero Tax for Salaried | Rs. 12,75,000 | Rs. 5,50,000 |
| Section 80C Available | No | Yes (up to Rs. 1,50,000) |
| HRA Exemption Available | No | Yes |
| Default Regime | Yes | No (opt-in required) |
| Highest Surcharge | 25% | 37% |
| Cess | 4% | 4% |
For a complete understanding of all deductions available under the old regime that can reduce your tax below what the slabs suggest, read the Complete Income Tax Guide India 2025-26 and 2026-27.
If you are a salaried professional trying to decide which regime saves more for your specific salary and investment profile, the old vs new tax regime comparison has worked examples at multiple salary levels to help you decide.
Questions about your specific tax slab or calculation? Drop them in the comments below.
