New tax regime slabs for FY 2025-26 and FY 2026-27

These slabs were introduced by the Finance Act, 2025 for financial year 2025-26 (assessment year 2026-27) and were not changed by the Union Budget 2026, so they also apply to FY 2026-27. The same table applies to every individual regardless of age; the higher exemption limits for senior citizens exist only in the old regime. Health and education cess of 4 percent is added to the tax, and a surcharge of 10, 15 or 25 percent applies above ₹50 lakh, ₹1 crore and ₹2 crore, capped at 25 percent in the new regime.

From 1 April 2026 the new regime sits in section 202 of the Income-tax Act, 2025 rather than section 115BAC of the 1961 Act. The numbers are the same.

A resident individual whose taxable income in the new regime does not exceed ₹12 lakh gets a rebate under section 87A of up to ₹60,000, which is exactly the slab tax at ₹12 lakh. The tax falls to nil. A salaried person also gets the standard deduction of ₹75,000 first, so a salary of up to ₹12.75 lakh bears no tax.

Two limits matter. The rebate is for residents only; a non-resident pays slab tax from ₹4 lakh. And it does not reduce tax on income charged at special rates, such as short-term gains on listed shares under section 111A or long-term gains under section 112A: a person with ₹9 lakh of salary and ₹2 lakh of short-term share gains pays tax on the gains even though the total is under ₹12 lakh.

Without relief, a taxable income of ₹12,10,000 would bear ₹61,500 of tax while ₹12,00,000 bears none, so earning ₹10,000 more would cost ₹61,500. Marginal relief caps the tax at the amount by which income exceeds ₹12 lakh: at ₹12,10,000 the tax is ₹10,000 plus cess. The relief runs out at about ₹12,70,000 of taxable income, after which normal slab tax is lower than the excess.

Run your own numbers, and the old-regime comparison, in our regime calculator.

Still allowed: the ₹75,000 standard deduction for salary and pension; the employer’s contribution to the National Pension System under section 80CCD(2), up to 14 percent of salary; the deduction of up to ₹25,000 from family pension; interest on a home loan for a let-out property against the rent; the exemptions for gratuity, leave encashment, voluntary retirement and the commuted pension; transport allowance for employees with disabilities; and the deduction for new employment under section 80JJAA for businesses.

Not allowed: section 80C investments, health insurance under 80D, house rent allowance, leave travel allowance, interest on a home loan for a self-occupied house, education loan interest under 80E, donations under 80G, and the savings interest deduction under 80TTA and 80TTB.

The test is simple: add up what you would lose. If your deductions and exemptions together come to less than roughly ₹3.75 lakh at an income around ₹12 to ₹15 lakh, and proportionately more above that, the new regime usually wins. A maxed 80C, a ₹2 lakh home loan interest deduction and substantial HRA can still tip it the other way.

The old regime keeps a ₹50,000 standard deduction, a rebate that makes income up to ₹5 lakh tax-free, and every deduction. The surcharge in the old regime rises to 37 percent above ₹5 crore.

The new regime is the default. Salaried taxpayers tell their employer which regime to use for TDS and can still choose the other when filing; they may switch every year. Taxpayers with business or professional income who want the old regime must file Form 10-IEA before the due date of the return, and once they leave the old regime they can return to it only once in a lifetime. Decide with a computation, not a rule of thumb; our tax planning service does it with your real numbers, and the return itself is filed from ₹499.