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

Income tax slabs for FY 2026-27 are unchanged from last year. Under the new regime, income up to ₹4 lakh is nil, rates rise in 5% steps up to 30% above ₹24 lakh, and a rebate makes taxable income up to ₹12 lakh tax-free. The old regime keeps its 5%, 20% and 30% slabs. What is new is the law itself: from 1 April 2026 these rates sit in the Income-tax Act, 2025.

The Income-tax Act, 2025 and "tax year" 2026-27

The Income-tax Act, 2025 replaced the 1961 Act from 1 April 2026. Two changes matter for reading slab tables:

• "Tax year" replaces "previous year" and "assessment year". Income earned between 1 April 2026 and 31 March 2027 is simply tax year 2026-27. You will still see "FY 2026-27 / AY 2027-28" in many places. They refer to the same income.
• Sections are renumbered. The new regime is now Section 202 (old Section 115BAC). The rebate is now Section 156 (old Section 87A). Deductions like the old 80C moved to Chapter VIII, starting with Section 123.

Returns for FY 2025-26, filed during 2026, still follow the 1961 Act and its old section numbers.

New tax regime slabs FY 2026-27 (default)

The new regime applies by default. It has the same slabs for every individual regardless of age.

Other features of the new regime:

• Standard deduction: ₹75,000 for salary and pension income.
• Rebate (Section 156): Up to ₹60,000 for resident individuals with taxable income up to ₹12 lakh. Normal income up to ₹12 lakh is therefore tax-free, or ₹12.75 lakh of salary after the standard deduction.
• Special-rate income is not covered by the rebate. Tax on capital gains taxed at special rates, such as equity STCG and LTCG, is payable even if your total income is under ₹12 lakh. See capital gains tax on mutual funds.
• Deductions: Almost none. The employer's NPS contribution is one of the few allowed.

Old tax regime slabs FY 2026-27

You must opt into the old regime. Its slabs depend on age.

• Standard deduction: ₹50,000 for salary and pension.
• Rebate: Up to ₹12,500 for residents with taxable income up to ₹5 lakh, so income up to ₹5 lakh is tax-free.
• Deductions: Section 123 (old 80C, up to ₹1.5 lakh), Section 126 (old 80D), NPS under Section 124, home loan interest, HRA and more.

Surcharge and cess

Health and education cess of 4% applies to income tax plus surcharge under both regimes.

Surcharge applies to high incomes:

Surcharge on dividends and on equity capital gains is capped at 15%. Marginal relief also applies just above each surcharge threshold. It stops tax from rising by more than the extra income.

Marginal relief near ₹12 lakh (new regime)

The ₹60,000 rebate is all-or-nothing: it disappears once taxable income crosses ₹12 lakh. Without a fix, earning ₹10,000 more could cost ₹61,500 in tax. Marginal relief solves this. It caps the tax (before cess) at the amount by which taxable income exceeds ₹12 lakh.

The relief ends where slab tax equals the excess: ₹60,000 + 15% × excess = excess, so the excess is about ₹70,588. Marginal relief therefore applies up to roughly ₹12,70,588 of taxable income, which is about ₹13.46 lakh of salary. You will sometimes see "₹12.75 lakh" quoted as the limit. That figure is the salary that produces exactly ₹12 lakh of taxable income, not the end of marginal relief.

How to calculate your tax in five steps

1. Add up gross total income: salary, interest from savings and FDs, rent, business income and capital gains.
2. Subtract what your regime allows. In the new regime that is mainly the ₹75,000 standard deduction. In the old regime it is the ₹50,000 standard deduction plus Chapter VIII deductions such as Section 123 (old 80C) and Section 126 (old 80D), along with exemptions like HRA.
3. Apply the slab rates to normal income, one slab at a time. Only the portion inside each slab is taxed at that slab's rate, so moving into a higher slab never raises tax on income below it.
4. Apply the rebate or marginal relief if you qualify, then add tax on special-rate income such as equity capital gains.
5. Add surcharge (if any) and 4% cess. Subtract TDS and advance tax already paid to find what is due, or what will be refunded.

Worked examples (new regime, salaried)

Example 1: ₹12.75 lakh salary Taxable income = ₹12,75,000 − ₹75,000 = ₹12,00,000. Slab tax = ₹60,000. The rebate of ₹60,000 brings tax to nil.

Example 2: ₹18 lakh salary Taxable income = ₹18,00,000 − ₹75,000 = ₹17,25,000.

• ₹4–8 lakh at 5% = ₹20,000
• ₹8–12 lakh at 10% = ₹40,000
• ₹12–16 lakh at 15% = ₹60,000
• ₹16–17.25 lakh at 20% = ₹25,000
• Tax = ₹1,45,000; plus 4% cess (₹5,800) = ₹1,50,800

Example 3: ₹30 lakh salary Taxable income = ₹29,25,000. Tax up to ₹24 lakh = ₹3,00,000. The remaining ₹5,25,000 at 30% adds ₹1,57,500. Tax = ₹4,57,500; plus cess (₹18,300) = ₹4,75,800.

The same ₹18 lakh salary under the old regime with only ₹1.5 lakh of 80C deductions gives taxable income of ₹16 lakh. That costs ₹2,92,500 + cess = ₹3,04,200, about double. Our new vs old tax regime guide shows how much in deductions you need before the old regime wins. You can test your own numbers with the income tax calculator.

Key takeaways

• FY 2026-27 slabs are unchanged: new regime nil to ₹4 lakh, then 5% steps up to 30% above ₹24 lakh. Old regime 5%/20%/30% above ₹2.5 lakh.
• These rates now live in the Income-tax Act, 2025. The new regime is Section 202 (old 115BAC) and the rebate is Section 156 (old 87A).
• Taxable income up to ₹12 lakh is tax-free under the new regime (₹12.75 lakh salary). Marginal relief smooths the jump up to about ₹12.71 lakh of taxable income.
• 4% cess applies to all tax plus surcharge. Surcharge starts at ₹50 lakh and tops out at 25% in the new regime.
• The rebate does not cover tax on special-rate capital gains.