Tax slabs for tax year 2026-27
The Income-tax Act, 2025 came into force on 1 April 2026, replacing the 1961 Act and the old "financial year / assessment year" terms with a single tax year. The slab rates set by the Finance Act stay the same as last year. Both regimes are shown below for residents under 60.
| New regime (default) | Rate | Old regime | Rate |
|---|---|---|---|
| Up to ₹4 lakh | Nil | Up to ₹2.5 lakh | Nil |
| ₹4–8 lakh | 5% | ₹2.5–5 lakh | 5% |
| ₹8–12 lakh | 10% | ₹5–10 lakh | 20% |
| ₹12–16 lakh | 15% | Above ₹10 lakh | 30% |
| ₹16–20 lakh | 20% | ||
| ₹20–24 lakh | 25% | ||
| Above ₹24 lakh | 30% |
The old regime has a higher nil band for senior citizens: ₹3 lakh for ages 60–79 and ₹5 lakh for 80 and above. A 4% health and education cess applies to all tax, and surcharge applies above ₹50 lakh of income (capped at 25% in the new regime).
The ₹12 lakh rebate
Under the new regime, a rebate of up to ₹60,000 makes taxable income up to ₹12 lakh tax-free. With the ₹75,000 standard deduction, that means a salary of up to ₹12.75 lakh pays no tax: tax on a ₹12.75 lakh salary is ₹0. Just above that, marginal relief ensures your tax never exceeds the income above ₹12 lakh. Without it, earning ₹1 more could cost ₹60,000 in tax. At ₹13 lakh of taxable income the tax is ₹78,000.
Worked example
Which regime should you choose?
The new regime has lower rates but almost no deductions: only the standard deduction and your employer's NPS contribution. The old regime has higher rates but allows deductions for investments, health insurance, HRA and home loan interest. The results panel shows the break-even point: if your eligible deductions are below it, the new regime wins.
- Salaried employees can switch between regimes every year when filing.
- Business income: if you have business or professional income, you can switch back to the old regime only once.
- Tell your employer your choice at the start of the year so TDS matches; you can still change it when filing the return.
Work out your HRA exemption on the HRA calculator, and see your monthly take-home pay on the in-hand salary calculator.
Frequently asked questions
Is income up to ₹12 lakh tax-free in tax year 2026-27?
Under the new regime, yes: the rebate covers taxable income up to ₹12 lakh, and salaried people also get a ₹75,000 standard deduction, so salaries up to ₹12.75 lakh pay no tax. The rebate doesn't apply to special-rate income such as capital gains.
Can I switch between old and new regime every year?
Salaried individuals without business income can choose each year when filing. Those with business income can switch back to the old regime only once.
What deductions are allowed in the new regime?
Mainly the ₹75,000 standard deduction for salaried people and your employer's NPS contribution. Investments, health insurance, HRA and self-occupied home loan interest are not deductible.
What changed with the Income-tax Act, 2025?
It replaced the 1961 Act from 1 April 2026, introduced the single 'tax year' term and renumbered sections, but the tax slabs and main deductions stayed the same.
Official references: Income Tax Department · Income Tax Department – Tax calculator