For FY 2026-27 (Assessment Year 2027-28), the Finance Minister made no changes to income tax slabs in Budget 2026 — the rates announced in Budget 2025 continue to apply. The biggest change from 2025 remains: income up to ₹12 lakh is effectively tax-free under the New Tax Regime due to the Section 87A rebate.
New Tax Regime (Default)
New Tax Regime Slabs — FY 2026-27
From FY 2023-24 onwards, the New Tax Regime is the default regime. If you don't specifically opt for the Old Regime when filing, your tax is calculated under the New Regime automatically.
| Income Slab | Tax Rate | Notes |
|---|---|---|
| Up to ₹4,00,000 | NIL | Basic exemption |
| ₹4,00,001 – ₹8,00,000 | 5% | |
| ₹8,00,001 – ₹12,00,000 | 10% | 87A Rebate → NIL |
| ₹12,00,001 – ₹16,00,000 | 15% | |
| ₹16,00,001 – ₹20,00,000 | 20% | |
| ₹20,00,001 – ₹24,00,000 | 25% | |
| Above ₹24,00,000 | 30% |
For salaried employees: Standard deduction of ₹75,000 is available under the New Regime. So gross salary up to ₹12,75,000 is effectively tax-free (₹12L taxable income after deduction, covered by 87A rebate of ₹60,000).
Old Tax Regime
Old Tax Regime Slabs — FY 2026-27
| Income Slab | Tax Rate | Senior Citizens (60-80) | Super Senior (80+) |
|---|---|---|---|
| Up to ₹2,50,000 | NIL | NIL | NIL |
| ₹2,50,001 – ₹3,00,000 | 5% | NIL | NIL |
| ₹3,00,001 – ₹5,00,000 | 5% | 5% | NIL |
| ₹5,00,001 – ₹10,00,000 | 20% | 20% | 20% |
| Above ₹10,00,000 | 30% | 30% | 30% |
Note: All amounts above are taxable income after deductions. Section 87A rebate under old regime applies for income up to ₹5L (max rebate ₹12,500). Add 4% Health & Education Cess on final tax in both regimes.
Which should you choose?
New vs Old Regime — Key Differences
- ₹12L effectively tax-free (₹12.75L for salaried)
- Lower slab rates across all income levels
- Standard deduction of ₹75,000 available
- No need to make tax-saving investments
- Simpler — less paperwork and calculations
- Best for: High income earners above ₹15L with few deductions
- No HRA, LTA, 80C, 80D, home loan interest
- Over 50 deductions and exemptions removed
- Section 80C deductions up to ₹1.5L (PPF, ELSS, LIC)
- HRA exemption for rent payers
- 80D — health insurance premium deduction
- Home loan interest deduction (Section 24b)
- Best for: Those with HRA + large 80C + home loan
- Higher base slab rates than New Regime
- Complex — requires investment proof documentation
- Only beneficial if total deductions exceed ₹3.5-4L
Real example
Tax Calculation — ₹15 Lakh Salary
Gross Salary: ₹15,00,000 — FY 2026-27
Old regime deductions
Key Deductions Available in Old Tax Regime
| Section | Deduction | Max Limit |
|---|---|---|
| Section 80C | PPF, ELSS, LIC, EPF, tuition fees, NSC | ₹1,50,000 |
| Section 80D | Health insurance premium (self + parents) | ₹25,000 – ₹75,000 |
| Section 80CCD(1B) | NPS additional contribution | ₹50,000 |
| HRA Exemption | House Rent Allowance (rent payers) | Actual (formula-based) |
| Section 24(b) | Home loan interest deduction | ₹2,00,000 |
| Section 80TTA | Savings account interest | ₹10,000 |
| Section 80G | Donations to approved funds | 50%–100% of donation |
Common questions