New Tax Regime Slabs FY 2026-27 With Examples
For FY 2026-27 the new tax regime slabs are unchanged: nil up to Rs 4 lakh, then 5%, 10%, 15%, 20% and 25% in Rs 4 lakh steps, and 30% above Rs 24 lakh. A rebate of up to Rs 60,000 makes tax nil on taxable income up to Rs 12 lakh, and salaried people also get a Rs 75,000 standard deduction.
Under the new tax regime, income up to Rs 4,00,000 is taxed at nil, and the remaining slabs rise in steps of 5 percentage points: 5% from Rs 4,00,001 to Rs 8,00,000, 10% from Rs 8,00,001 to Rs 12,00,000, 15% from Rs 12,00,001 to Rs 16,00,000, 20% from Rs 16,00,001 to Rs 20,00,000, 25% from Rs 20,00,001 to Rs 24,00,000, and 30% above Rs 24,00,000. A Section 87A rebate of up to Rs 60,000 then brings the tax to nil for anyone with taxable income up to Rs 12,00,000.
The slab table
| Taxable income | Rate |
|---|---|
| Up to Rs 4,00,000 | Nil |
| Rs 4,00,001 to Rs 8,00,000 | 5% above Rs 4,00,000 |
| Rs 8,00,001 to Rs 12,00,000 | Rs 20,000 + 10% above Rs 8,00,000 |
| Rs 12,00,001 to Rs 16,00,000 | Rs 60,000 + 15% above Rs 12,00,000 |
| Rs 16,00,001 to Rs 20,00,000 | Rs 1,20,000 + 20% above Rs 16,00,000 |
| Rs 20,00,001 to Rs 24,00,000 | Rs 2,00,000 + 25% above Rs 20,00,000 |
| Above Rs 24,00,000 | Rs 3,00,000 + 30% above Rs 24,00,000 |
Source: Income Tax Department, incometax.gov.in, new regime slab table (checked September 2026), and the Budget 2026-27 Memorandum explaining the Finance Bill, 2026, which states that no change is proposed in the rates for tax year 2026-27. These slabs first applied in FY 2025-26 and carry on unchanged for FY 2026-27.
Compare your tax under the new and old regimes, with the standard deduction, rebate, surcharge and cess included, using the income tax calculator.
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The Section 87A rebate: how income up to Rs 12 lakh pays no tax
Even though the slab table above shows tax starting from Rs 4,00,001, a separate rebate under Section 87A cancels out up to Rs 60,000 of tax for a resident individual whose taxable income does not exceed Rs 12,00,000. In practice, this means most salaried individuals with taxable income up to that level end up paying no income tax at all under the new regime, once the rebate is applied, so no cess is due either.
Just above Rs 12 lakh, the rebate stops, but marginal relief applies under the new regime: your tax cannot be more than the amount by which your taxable income exceeds Rs 12,00,000. At Rs 12,25,000 taxable, the slab tax is Rs 63,750 but you pay only Rs 25,000 (plus cess). This relief runs out at a taxable income of about Rs 12,70,500, where normal slab tax becomes the smaller figure.
The rebate does not cover tax on special-rate income such as capital gains on listed shares or equity funds; the Budget 2025 speech described the Rs 12 lakh limit as income "other than special rate income such as capital gains".
Worked examples for common salary levels
| Gross salary | Taxable income after Rs 75,000 standard deduction | Tax on slabs | Tax after rebate or marginal relief | With 4% cess |
|---|---|---|---|---|
| Rs 8,00,000 | Rs 7,25,000 | Rs 16,250 (5% of Rs 3,25,000) | Rs 0 (full rebate) | Rs 0 |
| Rs 12,00,000 | Rs 11,25,000 | Rs 52,500 (Rs 20,000 + 10% of Rs 3,25,000) | Rs 0 (full rebate) | Rs 0 |
| Rs 13,00,000 | Rs 12,25,000 | Rs 63,750 | Rs 25,000 (marginal relief: tax capped at the Rs 25,000 earned above Rs 12 lakh) | Rs 26,000 |
| Rs 15,00,000 | Rs 14,25,000 | Rs 93,750 (Rs 60,000 + 15% of Rs 2,25,000) | Rs 93,750 (no rebate) | Rs 97,500 |
| Rs 20,00,000 | Rs 19,25,000 | Rs 1,85,000 (Rs 1,20,000 + 20% of Rs 3,25,000) | Rs 1,85,000 (no rebate) | Rs 1,92,400 |
These are simplified examples for a resident individual below 60 with only salary income and no other deductions. Use the income tax calculator for your exact figure, including cess and any surcharge that applies at higher income levels.
The Rs 75,000 standard deduction for salaried taxpayers
Salaried individuals under the new regime can claim a standard deduction of Rs 75,000 against their gross salary before the slabs above are applied, which is why the worked examples subtract this amount first. The Budget 2025 speech set out this Rs 75,000 figure (that is why it quoted Rs 12.75 lakh as the nil-tax limit for salaried taxpayers), and Budget 2026 did not change it.
New regime vs old regime
The new regime, described above, offers lower rates and a bigger standard deduction but removes most of the deductions and exemptions available under the old regime, such as HRA, most Section 80C investments and a home loan interest deduction on a self-occupied property. Whether the new or old regime works out cheaper depends heavily on how many deductions you would otherwise claim, so compare both using the income tax calculator rather than assuming the new regime is automatically better just because the rates look lower.
The new tax regime is the default option if you do not actively choose the old regime when filing, so if you want to use the old regime and it works out cheaper for your situation, make sure to select it explicitly.
Common mistakes
- Assuming income just above Rs 12 lakh pays full slab tax: marginal relief caps the tax at the amount above Rs 12 lakh, up to about Rs 12.7 lakh.
- Forgetting to include cess on top of the computed tax when estimating the final amount payable.
- Claiming old-regime deductions like HRA or 80C investments under the new regime, where most of these are not available.
- Looking for "Section 115BAC" in FY 2026-27 papers: from 1 April 2026 the Income-tax Act, 2025 applies, it uses "tax year" instead of assessment year, and the new regime rates sit in its section 202.
Tools for this
Frequently asked questions
Is income up to Rs 12 lakh really tax free under the new regime?
Yes for a resident individual under the new regime: a rebate of up to Rs 60,000 cancels the tax on taxable income up to Rs 12,00,000, so no cess is due either. Just above that, marginal relief caps your tax at the amount by which you cross Rs 12 lakh. Special-rate income such as capital gains is outside the rebate.
What is the standard deduction under the new tax regime?
Rs 75,000 for salaried individuals, deducted from gross salary before the slab rates are applied. It was set in Budget 2025 and Budget 2026 did not change it.
Do these slabs apply to FY 2026-27?
Yes. The Budget 2026-27 Memorandum states that no change is proposed in the rates for tax year 2026-27, which now sit in section 202 of the Income-tax Act, 2025. The structure first applied in FY 2025-26.
Can I still choose the old tax regime?
Yes, the old regime remains available, but you need to actively select it when filing, since the new regime is now the default. Compare both using an income tax calculator before deciding.
Is cess included in these slab rates?
No, a 4% health and education cess applies on top of the computed tax (after any rebate) in both regimes. Add this separately when estimating your final tax payable.
Why does my salary slip still show "115BAC" or "AY 2026-27"?
AY 2026-27 refers to FY 2025-26 income, which is still filed under the Income-tax Act, 1961. Income earned from 1 April 2026 falls under the Income-tax Act, 2025, which calls the year "tax year 2026-27". The slab rates are the same in both.
Sources
- Income Tax Department: tax slabs and rebate for salaried individuals (checked 2026-09)
- Budget 2026-27: Memorandum explaining the Finance Bill, 2026 (rates for tax year 2026-27) (checked 2026-09)
- Budget 2025-26 speech (Rs 12 lakh rebate, Rs 75,000 standard deduction, marginal relief) (checked 2026-09)
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