Quick Answer: The new tax regime slabs for Tax Year 2026-27 are: nil up to ₹4 lakh, 5% on ₹4-8 lakh, 10% on ₹8-12 lakh, 15% on ₹12-16 lakh, 20% on ₹16-20 lakh, 25% on ₹20-24 lakh, and 30% above ₹24 lakh, plus 4% cess. Resident individuals pay no tax on taxable income up to ₹12 lakh, which works out to ₹12.75 lakh of salary after the ₹75,000 standard deduction.
If your payslip looks different this year, the new tax regime slabs are the first place to look. Budget 2026 left the rates unchanged, so what you paid last year remains the baseline. What did change is the law around it. The Income-tax Act, 2025 came into force on 1 April 2026, and it renames and renumbers many provisions you may know by heart. This guide gives you the slabs, the ₹12 lakh rebate, the marginal relief rule that most articles skip, and worked examples at real salary levels.
Key Takeaways
- The slab rates are unchanged for Tax Year 2026-27, which is the same period as FY 2026-27 (AY 2027-28).
- Taxable income up to ₹12 lakh attracts zero tax for resident individuals, and salaried people can earn up to ₹12.75 lakh.
- Just above ₹12 lakh, marginal relief caps your tax at the amount you earn over the limit.
- At ₹15 lakh salary, the old regime needs roughly ₹5.4 lakh of deductions to beat the new one.
- The new regime has no extra slab benefit for senior citizens.
What Changed for Tax Year 2026-27: The Income-tax Act 2025 in Plain Words
Nothing changed in the rates, but the vocabulary did. “Tax Year” now replaces “Previous Year” and “Assessment Year”, so Tax Year 2026-27 is the same as FY 2026-27 or AY 2027-28. Earlier years are still handled under the 1961 Act.
| Old term (1961 Act) | New term (2025 Act) |
|---|---|
| Assessment Year / Previous Year | Tax Year |
| Section 115BAC (new regime) | Section 202 |
| Section 87A (rebate) | Section 156 |
| Standard deduction | Section 19 |
| Section 80C | Section 123 |
Section 87A became Section 156, and the new regime moved from 115BAC to 202. If you read an older article that quotes 115BAC, it is describing the same regime under its previous number.
New Tax Regime Slabs for Tax Year 2026-27: Full Table
| Taxable income | Tax rate | Total tax at top of slab |
|---|---|---|
| Up to ₹4,00,000 | Nil | Nil |
| ₹4,00,001 to ₹8,00,000 | 5% | ₹20,000 |
| ₹8,00,001 to ₹12,00,000 | 10% | ₹60,000 |
| ₹12,00,001 to ₹16,00,000 | 15% | ₹1,20,000 |
| ₹16,00,001 to ₹20,00,000 | 20% | ₹2,00,000 |
| ₹20,00,001 to ₹24,00,000 | 25% | ₹3,00,000 |
| Above ₹24,00,000 | 30% | ₹3,00,000 plus 30% of the excess |
Each rate applies only to the portion of income inside that band. If your taxable income is ₹10 lakh, the first ₹4 lakh is nil, the next ₹4 lakh is taxed at 5% (₹20,000), and the last ₹2 lakh at 10% (₹20,000). Your slab tax is ₹40,000 before the rebate.
Two add-ons apply on top:
- Cess: 4% on the tax plus surcharge.
- Surcharge: 10% above ₹50 lakh, 15% above ₹1 crore and 25% above ₹2 crore in the new regime, with marginal relief at each threshold.
Is Income Up to ₹12 Lakh Really Tax-Free?
Yes, for resident individuals. A rebate of up to ₹60,000 under section 156 wipes out the slab tax when taxable income is ₹12 lakh or less. Add the ₹75,000 standard deduction and a salaried person’s gross pay can reach ₹12.75 lakh before any tax is due.
Three details trip people up:
- It is a rebate, not an exemption. You may still need to file a return, and the income still counts for other purposes.
- Residents only. NRIs do not get the rebate.
- Special-rate income is separate. The government’s own announcement describes the ₹12 lakh limit as excluding special-rate income such as capital gains. If you sold shares or property this year, check how that income is taxed separately.
Meena, a 62-year-old retired teacher, shows how this works. Her pension is ₹9 lakh. After the ₹75,000 standard deduction, her taxable income is ₹8.25 lakh. The slab tax is ₹22,500, and the rebate clears it completely.
Marginal Relief Above ₹12 Lakh, With a Real Example
Without marginal relief, earning ₹1 more than ₹12 lakh would cost you ₹60,000. The rule prevents that cliff: your tax cannot exceed the amount by which your income crosses ₹12 lakh. Section 156(2) includes this relief for income slightly above ₹12 lakh.
Take Priya, who earns ₹13 lakh gross.
- Taxable income after the standard deduction: ₹12.25 lakh.
- Slab tax without relief: ₹60,000 plus 15% of ₹25,000, which is ₹63,750.
- Income above ₹12 lakh: ₹25,000.
- Tax after marginal relief: ₹25,000, plus 4% cess of ₹1,000, so ₹26,000.
Relief shrinks as income rises and disappears at roughly ₹12.71 lakh of taxable income, or about ₹13.46 lakh gross for a salaried person. Past that point the normal slab tax is lower than the income above the limit. Verify the exact figure with an official calculator before you rely on it for a pay negotiation.
How Much Tax Will You Actually Pay? Worked Examples
These figures assume a salaried resident individual under 60 with only salary income, the ₹75,000 standard deduction and 4% cess.
| Gross salary | Taxable income | Tax before cess | Total tax with cess |
|---|---|---|---|
| ₹10,00,000 | ₹9,25,000 | Nil (rebate) | Nil |
| ₹12,75,000 | ₹12,00,000 | Nil (rebate) | Nil |
| ₹15,00,000 | ₹14,25,000 | ₹93,750 | ₹97,500 |
| ₹20,00,000 | ₹19,25,000 | ₹1,85,000 | ₹1,92,400 |
| ₹30,00,000 | ₹29,25,000 | ₹4,57,500 | ₹4,75,800 |
| ₹50,00,000 | ₹49,25,000 | ₹10,57,500 | ₹10,99,800 |
Here is the ₹15 lakh case step by step, for Rohit, a software engineer in Pune:
- Gross ₹15,00,000 minus ₹75,000 standard deduction gives ₹14,25,000.
- First ₹4 lakh: nil.
- ₹4-8 lakh at 5%: ₹20,000.
- ₹8-12 lakh at 10%: ₹40,000.
- ₹12-14.25 lakh at 15%: ₹33,750.
- Total ₹93,750, plus ₹3,750 cess, comes to ₹97,500 a year, or about ₹8,125 a month.
Rohit sits at ₹14.25 lakh taxable, so marginal relief does not help him. The ₹50 lakh row sits just under the surcharge threshold because taxable income is ₹49.25 lakh. You can test your own numbers with the income tax calculator for FY 2026-27.
Deductions You Can Still Claim in the New Tax Regime
The regime trades most deductions for lower rates, but a few remain.
| Allowed | Not allowed |
|---|---|
| Standard deduction of ₹75,000 (salary and pension) | HRA exemption |
| Employer NPS contribution under 80CCD(2), up to 14% of salary | Section 80C (PPF, ELSS, life insurance) |
| Family pension deduction | Section 80D (health insurance) |
| Interest on loans for let-out property | Interest on a self-occupied home loan |
| Agniveer Corpus Fund contributions | Section 80TTA and 80TTB interest deductions |
The employer NPS route is the most useful lever for private-sector employees. If your company allows it, a salary restructure that routes part of your pay to employer NPS lowers taxable income even in the new regime. The Income Tax Rules 2026 guide explains how the new rules treat these exemptions in more detail.
New Tax Regime vs Old Tax Regime: When Does the Old Regime Still Win?
Only when your deductions are large. Because the new regime’s zero-tax limit is so high, the old regime cannot beat it at low incomes. At ₹10 lakh gross, the new regime already gives nil tax, so the old regime can at best tie.
The table below shows the total deductions you would need under the old regime, on top of its ₹50,000 standard deduction, to match the new regime’s tax. These are my calculations for a salaried person under 60, before cess, using the old regime’s ₹2.5 lakh basic exemption. Check them against an official calculator.
| Gross salary | New regime tax (before cess) | Old regime deductions needed to match |
|---|---|---|
| ₹15 lakh | ₹93,750 | about ₹5.4 lakh |
| ₹20 lakh | ₹1,85,000 | about ₹7.1 lakh |
| ₹25 lakh | ₹3,07,500 | about ₹8.0 lakh |
| ₹30 lakh | ₹4,57,500 | about ₹8.0 lakh |
Now compare that with what a salaried person can realistically claim. Section 80C allows ₹1.5 lakh, 80CCD(1B) adds ₹50,000, 80D allows ₹25,000 for self and family and another ₹25,000 for non-senior parents (₹50,000 if a parent is a senior citizen), and a self-occupied home loan allows ₹2 lakh of interest. That totals about ₹4.25 lakh to ₹4.75 lakh before HRA. So at ₹15 lakh, you would need roughly ₹1 lakh or more of HRA exemption to break even. At ₹25 lakh and above, almost nobody gets there.
The old regime can still make sense if you:
- Pay a large home loan, so that a home loan calculator shows ₹2 lakh of annual interest.
- Pay high rent in a metro and receive HRA.
- Pay premiums for parents, as covered in our guide to the best health insurance for parents.
- Already invest heavily in 80C and NPS.
If none of these apply, the new regime is usually simpler and cheaper.
New Tax Regime Slabs by Taxpayer Type
The slab table is the same for everyone, but the practical rules differ by who you are.
Salaried and private-sector employees
The new regime is the default. Your employer deducts TDS under it unless you tell them otherwise. You can switch every year when you file your return.
Government employees
The employer NPS benefit is the big one. In the new regime, the 14% of salary limit applies to employers of all categories. Your Form 16 will show which regime your office used.
Freelancers and self-employed professionals
You get no standard deduction, because you have no salary. Many professionals instead use presumptive taxation under section 44ADA, which treats 50% of receipts as income if you qualify. Take Karan, a freelance software consultant with ₹18 lakh in digital receipts. If he qualifies, his deemed income is ₹9 lakh, the slab tax is ₹30,000, and the rebate covers it, provided he has no other income. Confirm eligibility and the receipts limit before you choose this route.
Business owners
The choice is stricter for you. If you have business income and opt out of the new regime, you must file Form 10-IEA by the due date. Returning to the new regime is allowed only once in a lifetime. Treat that switch as a long-term decision, not a yearly one.
Pensioners and senior citizens
The new regime does not give seniors different slabs. A 65-year-old and a 35-year-old face the same table. Pension is taxed like salary, so the standard deduction applies. Residents aged 75 or more with only pension and interest income from the same specified bank may be exempt from filing a return under section 194P.
First-time taxpayers and young professionals
If your income is salary only and below ₹12.75 lakh, you probably owe nothing, but you should still file to build a record. Keep your pay slips and check your tax credit statement. Our guide on how to download Form 26AS online shows where to find it.
High-income earners
Watch the surcharge thresholds. The new regime caps surcharge at 25%, which can make it cheaper than the old regime’s 37% above ₹5 crore.
HR professionals and tax consultants
Collect regime declarations at the start of the year, not in January. A late switch forces a catch-up in the final months. If your team files returns, see our walkthrough on how to file TDS returns using a digital signature.
How to Choose or Switch Your Regime
- Estimate your annual income and list the deductions you can actually claim.
- Compare both regimes using the break-even table above or a calculator.
- Tell your employer your choice so TDS matches it.
- Check your tax credit statement before you file.
- Select the regime when you file your return. Non-business taxpayers can choose again every year.
A mismatch between what your employer deducted and what your return computes can lead to an intimation. If you receive one, read our explainer on the income tax demand notice under section 143(1).
New Tax Regime Slabs: A Year-by-Year Comparison
| Tax year | Nil up to | 30% starts above | Zero-tax limit (rebate) | Standard deduction |
|---|---|---|---|---|
| FY 2023-24 | ₹3 lakh | ₹15 lakh | ₹7 lakh | ₹50,000 |
| FY 2024-25 | ₹3 lakh | ₹15 lakh | ₹7 lakh | ₹75,000 |
| FY 2025-26 and Tax Year 2026-27 | ₹4 lakh | ₹24 lakh | ₹12 lakh | ₹75,000 |
The FY 2024-25 structure used slab bands of ₹3-7 lakh, ₹7-10 lakh, ₹10-12 lakh and ₹12-15 lakh. The jump to the current structure came in Budget 2025, which pushed the zero-tax limit from ₹7 lakh to ₹12 lakh.
Common Mistakes to Avoid
- Assuming ₹12 lakh covers capital gains. The rebate does not shield special-rate income.
- Forgetting cess. Tax at ₹15 lakh is ₹93,750, but you pay ₹97,500.
- Using old tables. Pages built for AY 2025-26 show a ₹7 lakh limit that no longer applies.
- Ignoring HRA and home loan interest. Run both regimes before deciding.
- Treating the business-income switch lightly. You get one return to the new regime in your lifetime.
Expert Tips
- Run the comparison again whenever your rent, loan or salary structure changes.
- Ask HR whether employer NPS is available. It is one of the few deductions that survives in the new regime.
- Keep a printout of your regime declaration with your Form 16.
- Use the official Income Tax Department calculator to confirm any figure before you file.
FAQs: New Tax Regime Slabs 2026-27
What are the income tax slabs under the new regime for 2026-27?
Income up to ₹4 lakh is nil. Then 5% on ₹4-8 lakh, 10% on ₹8-12 lakh, 15% on ₹12-16 lakh, 20% on ₹16-20 lakh, 25% on ₹20-24 lakh and 30% above ₹24 lakh. Add 4% cess. These slabs did not change after Budget 2026.
Is income up to ₹12 lakh tax-free under the new regime?
Yes, for resident individuals. The section 156 rebate of up to ₹60,000 cancels the tax on taxable income up to ₹12 lakh. Salaried employees can earn ₹12.75 lakh because of the ₹75,000 standard deduction. Special-rate income such as capital gains is treated separately.
What is the standard deduction in the new tax regime?
It is ₹75,000 for salaried employees and pensioners. It reduces your taxable income automatically, so you do not need to submit proof for it. Freelancers and business owners without salary income do not get it.
Do senior citizens get higher slabs in the new regime?
No. The new regime applies the same slabs to every age group. Seniors keep other practical benefits, such as the section 194P filing exemption for those aged 75 or more who meet its conditions, but they get no extra basic exemption in this regime.
Is the new tax regime the default?
Yes. Your employer deducts TDS under it unless you choose the old regime. Salaried and non-business taxpayers can pick either regime each year when filing. Business-income earners who opt out must use Form 10-IEA.
Did the Income-tax Act 2025 change the slabs?
No. The Act renamed and renumbered provisions, so the new regime now sits in section 202 and the rebate in section 156. Tax Year 2026-27 uses the same rates as FY 2025-26.
Conclusion
The new tax regime slabs are easier to use than they look. Know the seven bands, remember that ₹12 lakh (₹12.75 lakh for salaried people) is the zero-tax line, and use marginal relief if you land just above it. For most people earning ₹15 lakh or less, the new regime wins on tax and paperwork. Above that, compare it with the old regime using your real deductions, not rough guesses. Run your own numbers with the income tax calculator for FY 2026-27 before you decide.
Sources referred: Income Tax Department tax rates page and e-filing portal guidance for AY 2026-27, the PIB release on Union Budget 2025-26 (1 February 2025), and published summaries of the Income-tax Act, 2025.
Disclaimer: This article is for general information only and is not tax, legal or financial advice. Tax rules, thresholds, and section numbers can change, and your situation may differ. Verify figures with the Income Tax Department or a qualified chartered accountant before you file.
