Income Tax Slabs 2026-27
Updated tax slabs for FY 2025-26 (AY 2026-27) under the default New Tax Regime and comparison with the Old Tax Regime.
The Default Tax Regime
For the Assessment Year 2026-27 (Financial Year 2025-26), the New Tax Regime under Section 115BAC is the default framework for individuals, HUFs, and AOPs. This regime offers lower tax rates while eliminating most traditional exemptions and deductions, making it the automatic choice unless taxpayers explicitly opt for the Old Regime.
New Tax Regime Slabs (FY 2025-26)
| Taxable Income Range (₹) | Tax Rate |
|---|---|
| Up to 4,00,000 | Nil |
| 4,00,001 – 8,00,000 | 5% |
| 8,00,001 – 12,00,000 | 10% |
| 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% |
Section 87A Rebate Benefit
Tax-Free Income Up to ₹12,75,000
- • Section 87A rebate makes income up to ₹12,00,000 completely tax-free
- • Standard deduction of ₹75,000 for salaried employees
- • Effective tax-free threshold: ₹12,75,000
Old Tax Regime (Opt-in Alternative)
The Old Tax Regime remains available for taxpayers who prefer to claim deductions and exemptions. It maintains higher marginal rates but permits utilization of traditional tax-saving instruments.
| Taxable Income (₹) | Tax Rate |
|---|---|
| Up to 2,50,000 | Nil |
| 2,50,001 – 5,00,000 | 5% |
| 5,00,001 – 10,00,000 | 20% |
| Above 10,00,000 | 30% |
Available Deductions (Old Regime Only)
Section 80C
Up to ₹1.5L - PPF, ELSS, LIC, FD, NSC, tuition fees, principal repayment of home loan
Section 80D
Up to ₹25,000 (₹50,000 for senior citizens) - Health insurance premium
HRA Exemption (Section 10(13A))
Least of: Actual HRA, 50% basic (metro)/40% basic (non-metro), or rent paid minus 10% basic
Section 24(b)
Up to ₹2L - Interest on housing loan for self-occupied property
Section 80CCD(1B)
Additional ₹50,000 - NPS contribution over and above 80C limit
Section 80E
Full interest amount - Education loan interest for higher studies
Section 80TTA/80TTB
₹10,000 (80TTA for all) / ₹50,000 (80TTB for senior citizens) - Interest on savings account
Section 80G
50% or 100% of donation - Donations to eligible charitable institutions
Surcharge and Health & Education Cess
| Income Range (₹) | Surcharge Rate |
|---|---|
| Up to 50,00,000 | Nil |
| 50,00,001 – 1,00,00,000 | 10% |
| 1,00,00,001 – 2,00,00,000 | 15% |
| 2,00,00,001 – 5,00,00,000 | 25% |
| Above 5,00,00,000 | 37% |
Health & Education Cess
4% of (Income Tax + Surcharge) is levied as Health and Education Cess on all taxpayers, regardless of the regime chosen. This cess is used to fund health and education initiatives.
Which Tax Regime Should You Choose?
The choice between New and Old tax regimes depends on your income level and the deductions/exemptions you can claim. Here is a general guideline:
Choose New Regime If:
- • Your income is below ₹15 lakhs with minimal deductions
- • You do not have significant 80C, 80D, or HRA claims
- • You prefer simpler tax filing without tracking deductions
- • You are a new taxpayer without existing tax-saving investments
- • You want lower tax rates and easy compliance
Choose Old Regime If:
- • Your deductions exceed ₹4-5 lakhs annually
- • You have home loan interest (Section 24) claims
- • You receive HRA and pay significant rent
- • You invest heavily in 80C instruments (PPF, ELSS, LIC)
- • Your income is above ₹20 lakhs with substantial deductions
Break-even Analysis
Generally, the Old Regime becomes beneficial if your total deductions and exemptions exceed approximately ₹4.5-5 lakhs. For incomes up to ₹15 lakhs, if your deductions are less than ₹4 lakhs, the New Regime is typically better.
Tip: Calculate your tax liability under both regimes before filing. You can use online tax calculators or consult a tax professional for complex situations.
Special Provisions for Senior and Super Senior Citizens
Senior Citizens (60-80 years)
Under Old Regime: Basic exemption limit is ₹3,00,000 instead of ₹2,50,000
- • No advance tax liability if TDS covers full tax
- • Section 80TTB: Up to ₹50,000 deduction on interest income
- • Section 80D: Enhanced limit of ₹50,000 for health insurance
Super Senior Citizens (Above 80 years)
Under Old Regime: Basic exemption limit is ₹5,00,000
- • Exempt from e-filing (can file paper returns)
- • No advance tax payment required
- • All senior citizen benefits applicable
Note: The enhanced exemption limits for senior citizens apply only under the Old Tax Regime. Under the New Tax Regime, the basic exemption limit of ₹4,00,000 is the same for all individuals regardless of age.