Quick answer
For Tax Year 2026-27 (FY 2026-27), income up to ₹12 lakh is tax-free under the new regime. For salaried people, that is ₹12.75 lakh of salary, thanks to the ₹75,000 standard deduction and the ₹60,000 rebate. On a ₹15 lakh salary, new-regime tax is ₹97,500, compared with ₹2,02,800 under the old regime even with full 80C and ₹25,000 of 80D deductions. The old regime wins only if your total deductions are large.
Key takeaways
- The new regime is the default. You must choose the old regime when filing if you want it.
- Salaried taxpayers can switch regimes every year. People with business income can switch back only once.
- Marginal relief means tax just above ₹12 lakh cannot exceed the income above ₹12 lakh.
- The Income-tax Act, 2025 replaced the 1961 Act from 1 April 2026. Section numbers changed (80C is now Section 123), but slabs and limits carried over.
New regime tax slabs — Tax Year 2026-27
| Taxable income | Tax rate |
|---|---|
| ₹0 – ₹4,00,000 | Nil |
| ₹4,00,001 – ₹8,00,000 | 5% |
| ₹8,00,001 – ₹12,00,000 | 1% |
| ₹12,00,001 – ₹16,00,000 | 15% |
| ₹16,00,001 – ₹20,00,000 | 2% |
| ₹20,00,001 – ₹24,00,000 | 25% |
| Above ₹24,00,000 | 3% |
Standard deduction for salaried people and pensioners: ₹75,000. Rebate u/s 87A: up to ₹60,000 if taxable income is ₹12 lakh or less. Surcharge: 10% above ₹50 lakh, 15% above ₹1 crore, 25% above ₹2 crore (capped at 25%). Health & education cess: 4%.
Old regime tax slabs
| Taxable income | Tax rate |
|---|---|
| ₹0 – ₹2,50,000 | Nil |
| ₹2,50,001 – ₹5,00,000 | 5% |
| ₹5,00,001 – ₹10,00,000 | 2% |
| Above ₹10,00,000 | 3% |
Senior citizens (60–79) get a ₹3 lakh basic exemption; super seniors (80+) get ₹5 lakh. Standard deduction: ₹50,000. Rebate u/s 87A: up to ₹12,500 if taxable income is ₹5 lakh or less. Surcharge goes up to 37% for income above ₹5 crore.
Tax at common salary levels
| Gross salary | New regime | Old regime | Better option |
|---|---|---|---|
| ₹7,00,000 | ₹0 | ₹0 | New |
| ₹10,00,000 | ₹0 | ₹70,200 | New |
| ₹12,75,000 | ₹0 | ₹1,32,600 | New |
| ₹15,00,000 | ₹97,500 | ₹2,02,800 | New |
| ₹20,00,000 | ₹1,92,400 | ₹3,58,800 | New |
| ₹25,00,000 | ₹3,19,800 | ₹5,14,800 | New |
| ₹30,00,000 | ₹4,75,800 | ₹6,70,800 | New |
| ₹50,00,000 | ₹10,99,800 | ₹12,94,800 | New |
See all slabs and more examples on the income tax slabs page.
Which regime should you choose?
Add up everything you can claim only in the old regime: HRA exemption, 80C, 80D, 80CCD(1B), home loan interest, and others. The calculator shows the break-even amount above. If your deductions are below it, pick the new regime.
As a rough guide, the old regime usually wins only for people with high rent in a metro plus a home loan, or with very large deductions.
Frequently asked questions
Is income up to ₹12 lakh tax-free in FY 2026-27?
Yes, under the new regime for resident individuals. The Section 87A rebate of up to ₹60,000 cancels tax on taxable income up to ₹12 lakh. Salaried people also get the ₹75,000 standard deduction, so a salary up to ₹12.75 lakh pays no tax. The rebate does not apply to special-rate income such as capital gains on shares.
What changed in Budget 2026 for income tax?
Budget 2026 made no change to income tax slabs, rates, rebate or standard deduction. The main change is legal: the Income-tax Act, 2025 took effect on 1 April 2026, replacing "previous year / assessment year" with a single "tax year" and renumbering sections.
Can I switch between old and new regime every year?
Salaried individuals without business income can choose each year when filing the return. Taxpayers with business or professional income can opt out of the new regime once, and can switch back only once in their lifetime.
What is marginal relief in the new regime?
If your taxable income is slightly above ₹12 lakh, the tax cannot be more than the amount by which your income exceeds ₹12 lakh. For example, at ₹12.1 lakh taxable income the tax is capped at ₹10,000 plus cess.
Is the standard deduction available in the new regime?
Yes. ₹75,000 for salaried employees and pensioners in the new regime, compared with ₹50,000 in the old regime.
Which deductions are allowed in the new regime?
Very few: the standard deduction, the employer's NPS contribution (80CCD(2), up to 14% of basic), the Agniveer Corpus Fund, and interest on a let-out property's loan against rental income. 80C, 80D, HRA and LTA are not allowed.
Sources & methodology
Formulas follow the standard methods used by Indian banks, fund houses and government schemes. Rates and tax rules were checked against official sources on 1 October 2026. Read our methodology.
This calculator gives an estimate for planning purposes. Actual returns, tax and eligibility depend on your situation and on product terms. It is not financial advice.