Income Tax Slabs 2026-27: New and Old Regime Rates

The income slab rates under the New Tax Regime and the Old Tax Regime are different. This difference has given a distinction between the Old and New Tax regime. Even the exemptions, allowances, and deductions under the Old and the New tax regime are different from each other. Not all exemptions, allowances, and deductions are available under both of the tax regimes. It is to be noted that if one of the two tax regimes is not opted for, the taxes will automatically be computed under the New tax regime by default.

Income tax slabs for 2026-27 at a glance

For Tax Year 2026-27, and for FY 2025-26 whose return is filed in AY 2026-27, the new tax regime has these slabs: nil up to ₹4 lakh, then 5%, 10%, 15%, 20% and 25% for every ₹4 lakh, and 30% above ₹24 lakh. A resident individual whose total income is up to ₹12 lakh pays no tax, because of a rebate of up to ₹60,000. The Finance Act, 2026 did not change any slab.

The same slabs apply to everyone under the new regime, whatever their age.

Which year is "2026-27"?

People search for "2026-27" meaning two different years. The slabs are the same for both, but the return is different:

If you are unsure which year you are filing for, read Financial Year vs Assessment Year.

What is an Income Tax Slab?

Income tax in India is the tax levied on the income of an individual. The salary that you earn is what the tax is chargeable upon, given that it exceeds the exemption level. This tax is applied based on your income level, or income range. Different tax slabs are associated with different ranges of income. This means that as your income keeps increasing, the income tax rate also increases. A progressive taxation system is established through the system of Income Tax Slabs.

Each rate applies only to the part of your income that falls inside that slab, not to your whole income. Someone with a taxable income of ₹10 lakh under the new regime pays nothing on the first ₹4 lakh, 5% on the next ₹4 lakh and 10% on the last ₹2 lakh: ₹40,000 in all.

New Tax Regime: rules for 2026-27

The new regime is the default. Under the Income-tax Act, 2025 its slabs sit in section 202(1); for FY 2025-26 they sit in section 115BAC of the old Act. The numbers are the same.

• Standard deduction: ₹75,000 for salaried employees and pensioners (section 19, Table item 2).
• Rebate: a resident individual with total income up to ₹12,00,000 gets a rebate of the full tax, up to ₹60,000 (section 156(2), earlier section 87A).
• Deductions you keep: your employer's contribution to your NPS account, up to 14% of salary for every employer (section 124(1) read with 124(2), earlier 80CCD(2)). Most other deductions, such as section 123 (earlier 80C) and your own NPS contribution under section 124(3), are not allowed.

Why a salary of ₹12.75 lakh pays no tax

Take a salary of ₹12,75,000. The standard deduction of ₹75,000 brings taxable income to ₹12,00,000. Tax on ₹12,00,000 is ₹60,000 (₹20,000 on ₹4–8 lakh plus ₹40,000 on ₹8–12 lakh). The rebate of up to ₹60,000 cancels all of it, so the tax payable is nil.

Marginal relief just above ₹12 lakh

The rebate does not stop suddenly at ₹12 lakh. If your income is a little above it, the tax you pay cannot be more than the amount by which your income crosses ₹12 lakh (section 156(2)(b)).

For example, on a taxable income of ₹12,10,000 the slab tax is ₹61,500. Your income is only ₹10,000 above ₹12 lakh, so you pay ₹10,000 plus 4% cess, which is ₹10,400. This relief runs out at about ₹12.7 lakh of taxable income, where the slab tax and the excess income become equal.

The rebate is for residents only. A non-resident pays slab tax from the first rupee above ₹4 lakh.

Old Tax Regime: rules for 2026-27

For those opting for the Old Tax Regime, the slab depends on your age. These rates are in Part I-B of the First Schedule of the Finance Act, 2026 for Tax Year 2026-27, and Part I-A for FY 2025-26. They have not changed for several years.

The higher exemption limits of ₹3 lakh and ₹5 lakh are for residents only. A non-resident of any age uses the "below 60" column.

• Standard deduction: ₹50,000 for salaried employees and pensioners.
• Rebate: a resident individual with total income up to ₹5,00,000 gets a rebate of up to ₹12,500 (section 156(1)). It does not apply to Non-Resident Indians.
• Deductions: the old regime keeps the familiar deductions, for example up to ₹1,50,000 under section 123 (earlier 80C), up to ₹50,000 more for your own NPS contribution under section 124(3) (earlier 80CCD(1B)), and your employer's NPS contribution up to 10% of salary (14% for government employers). See Exemptions, Allowances, and Deductions under the Old and New Tax Regime and employer contribution limits in corporate NPS.

Surcharge and Health and Education Cess

Both regimes add a Health and Education Cess of 4% on income tax plus surcharge. Surcharge applies only to high incomes:

Marginal relief also applies at each surcharge threshold, so crossing ₹50 lakh by a small amount does not raise your tax by more than the extra income. The Income Tax Department lists the full surcharge rules here.

Old vs New Tax Regime: a worked example

Take a salaried person below 60 with a salary of ₹15,00,000 who invests the full ₹1,50,000 under section 123 and ₹50,000 in NPS:

In this case the new regime costs ₹97,500 less. The old regime only wins when your deductions (home-loan interest, HRA, section 123, NPS and others) are large. Work out both before you choose.

How to choose your regime

• In FY 23-24 the default regime was changed to the New tax regime. That is still the rule: if you do nothing, your tax is computed under the new regime.
• If you have no business income, you can choose the old regime each year in your return, filed by the due date (section 202(4)(b)). You can choose differently next year.
• If you have business or professional income, you choose the old regime by the due date, and you can switch back to the new regime only once (section 202(4)(a)).

Choosing the old regime with your employer only changes how much TDS is cut from your salary. The final choice is made in your return.

Did Budget 2026 change the income tax slabs?

No. The Finance Act, 2026, passed on 30 March 2026, kept the same slabs and the same rebate for FY 2025-26 (AY 2026-27) and for Tax Year 2026-27. What changed is the law the slabs sit in: from 1 April 2026 the Income-tax Act, 2025 replaced the Income-tax Act, 1961, so section numbers changed (115BAC is now 202, 87A is now 156, 80C is now 123).

Income Tax Slabs FY 2023-24 & AY 2024-25, and earlier years

The new regime's slabs have changed twice in three years. If you are filing a belated or updated return for an earlier year, use that year's slabs:

For FY 2023-24 and FY 2024-25, a resident with income up to ₹7 lakh paid no tax under the new regime, through a rebate of up to ₹25,000 under section 87A. The old regime's slabs are the same in all three years. Slab source: section 115BAC(1A) as substituted by the Finance (No. 2) Act, 2024.

Position as of October 2026, from the Income-tax Act, 2025 (sections 19, 123, 124, 156 and 202), the Finance Act, 2026 (First Schedule, Parts I-A and I-B) and the Income Tax Department. This is general information, not tax advice.

Frequently asked questions

What's the Difference Between Old and New Tax Regimes?

The new regime has seven slabs from nil up to ₹4 lakh to 30% above ₹24 lakh, a ₹75,000 standard deduction and a rebate that makes income up to ₹12 lakh tax-free, but allows few deductions. The old regime has four slabs from nil up to ₹2.5 lakh to 30% above ₹10 lakh and keeps deductions such as section 123 (earlier 80C). If you don't choose, the new regime applies.

How Do I Choose Between Old and New Tax Regimes?

Work out your tax both ways. On a ₹15 lakh salary with ₹2 lakh of section 123 and NPS deductions, the new regime costs ₹97,500 and the old regime ₹1,95,000. The old regime wins only when your deductions are large. Without business income you can choose again every year in your return.

Is income up to ₹12 lakh tax-free in 2026-27?

Yes, for a resident individual under the new regime. Tax on ₹12 lakh is ₹60,000 and the rebate under section 156 cancels it. A salaried person can earn ₹12.75 lakh tax-free because of the ₹75,000 standard deduction.

Has the Finance Act, 2026 changed the tax slabs?

No. The Finance Act, 2026 kept the same slabs for FY 2025-26 (AY 2026-27) and for Tax Year 2026-27. Only the section numbers changed, because the Income-tax Act, 2025 replaced the 1961 Act from 1 April 2026.

Are the slabs different for senior citizens?

Only in the old regime. Residents aged 60 to 79 pay no tax up to ₹3 lakh, and residents aged 80 or more pay none up to ₹5 lakh. In the new regime everyone has the same slabs, with nil tax up to ₹4 lakh.