The Income Tax Slabs in India for 2026–27 are important for salaried employees, professionals, freelancers, business owners and other individual taxpayers.
For the Tax Year 2026–27, taxpayers can compare the New Tax Regime with the Old Tax Regime. The new regime has wider tax slabs and generally fewer deductions, while the old regime allows taxpayers to claim several deductions and exemptions if they meet the applicable conditions.
The new tax regime continues with slabs starting at ₹4 lakh, while the old regime continues with different basic exemption limits based on age.
Important: Tax Year 2026–27 corresponds broadly to income earned from April 1, 2026 to March 31, 2027. The return for this income will generally relate to Assessment Year 2027–28.
New Tax Regime Slabs 2026–27
The new tax regime is the default tax regime for eligible individual taxpayers, although taxpayers may be able to choose the old regime subject to the applicable rules.
The tax slabs under the new regime are:
| Taxable Income | 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% |
These slab rates are confirmed by the Income Tax Department’s current guidance.
Rebate Under the New Tax Regime
One of the most important features of the new regime is the rebate available to eligible resident individuals.
For Tax Year 2026–27, the rebate can result in zero income tax where the eligible taxable income does not exceed ₹12 lakh, subject to the applicable conditions.
For salaried taxpayers, the standard deduction can further affect taxable income. Therefore, a salaried person’s gross salary can be higher than ₹12 lakh while their taxable income remains within the rebate threshold.
The rebate should not be confused with the tax slab itself. Income above the applicable rebate threshold can result in tax liability according to the slab structure.
Old Tax Regime Slabs 2026–27
The old tax regime continues to use age-based basic exemption limits.
Individuals Below 60 Years
| 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% |
For eligible taxpayers, the rebate under Section 87A can make tax payable zero when the applicable total income is within the prescribed limit.
Senior Citizens: 60 to Below 80 Years
| Taxable Income | Tax Rate |
| Up to ₹3,00,000 | Nil |
| ₹3,00,001 – ₹5,00,000 | 5% |
| ₹5,00,001 – ₹10,00,000 | 20% |
| Above ₹10,00,000 | 30% |
Super Senior Citizens: 80 Years and Above
| Taxable Income | Tax Rate |
| Up to ₹5,00,000 | Nil |
| ₹5,00,001 – ₹10,00,000 | 20% |
| Above ₹10,00,000 | 30% |
The Income Tax Department confirms the age-based structure for the old regime.
New vs Old Tax Regime
The biggest difference is not simply the tax rate.
The two regimes also differ in how deductions and exemptions are treated.
| Feature | New Tax Regime | Old Tax Regime |
| Basic exemption limit | ₹4 lakh | ₹2.5 lakh for individuals below 60 |
| Tax slabs | More slabs | Fewer slabs |
| Maximum normal slab rate | 30% | 30% |
| Standard deduction for eligible salaried taxpayers | Available subject to rules | Available subject to rules |
| Section 80C deductions | Generally not available | Available subject to conditions |
| HRA exemption | Generally not available | Available subject to conditions |
| Home-loan interest benefits | Restrictions apply | More deductions may be available |
| Tax calculation | Simpler for many taxpayers | More deduction-based |
The old regime can become attractive for people who have significant eligible deductions and exemptions.
Example: Income of ₹10 Lakh
Suppose a taxpayer has ₹10 lakh of taxable income before considering the final tax calculation.
Under the new regime, the slab calculation is:
- ₹0–₹4 lakh → Nil
- ₹4–₹8 lakh → 5% = ₹20,000
- ₹8–₹10 lakh → 10% = ₹20,000
Total income tax before cess = ₹40,000.
The actual tax payable can differ depending on rebate eligibility, deductions, special-rate income and other applicable provisions.
Example: Income of ₹15 Lakh
Under the new regime:
- First ₹4 lakh → Nil
- Next ₹4 lakh → ₹20,000
- Next ₹4 lakh → ₹40,000
- Next ₹3 lakh → ₹45,000
Total tax before cess = ₹1,05,000.
A 4% Health and Education Cess would then be calculated on the applicable income-tax amount.
However, this is a simplified slab example. Actual tax calculation can change because of deductions, rebate, special-rate income and other provisions.
Standard Deduction Under the New Regime
Eligible salaried employees and pensioners can claim the applicable standard deduction under the tax rules.
This deduction reduces taxable salary income.
For example, if an eligible salaried employee has a gross salary of ₹13 lakh, the taxable income may be lower after applying the standard deduction.
This is one reason why comparing tax based only on gross salary can produce an incorrect result.
Which Tax Regime Is Better?
There is no single answer for every taxpayer.
New Tax Regime May Suit You If:
- You have relatively few deductions
- You do not claim large HRA benefits
- You have limited investments under deduction sections
- You want a simpler calculation
- Most of your income is regular salary or business income
Old Tax Regime May Suit You If:
- You claim significant Section 80C deductions
- You have eligible HRA exemption
- You have eligible home-loan interest deductions
- You have other substantial deductions
- Your total eligible deductions significantly reduce taxable income
The best choice should be based on an actual comparison of tax under both regimes.
Important Deductions Under the Old Regime
The old regime can allow several deductions and exemptions subject to conditions.
Common examples include:
Section 80C
Eligible investments and payments can qualify for deductions up to the applicable limit.
Examples can include:
- EPF
- PPF
- ELSS
- Life insurance premiums
- Certain tuition fees
- Principal repayment of eligible home loans
Section 80D
Eligible health insurance premiums can qualify for deduction subject to the prescribed conditions and limits.
Home Loan Interest
Eligible taxpayers may claim applicable deductions for home-loan interest subject to the relevant provisions.
HRA
Salaried taxpayers receiving House Rent Allowance may be able to claim an exemption if the applicable conditions are satisfied.
The availability and amount of each deduction depend on the taxpayer’s circumstances.
What Is Health and Education Cess?
A 4% Health and Education Cess is generally charged on the applicable income-tax and surcharge amount.
For example, if the calculated income tax is ₹1,00,000 and no surcharge applies, a 4% cess would be ₹4,000.
The total would therefore be ₹1,04,000.
What Is Surcharge?
Surcharge can apply to taxpayers with higher levels of income.
The rate depends on the income level and applicable tax regime and provisions.
It is calculated on the applicable income-tax amount, not simply added to the taxable income.
Additional rules can apply to certain types of income, so high-income taxpayers should check the applicable provisions carefully.
Does the New Tax Regime Have Age-Based Slabs?
Generally, the new regime does not use different normal slab rates based on whether an individual is below 60, a senior citizen or a super senior citizen.
The old regime, however, provides different basic exemption limits based on age.
This is an important difference for senior citizens comparing the two regimes.
Income Tax Slabs for Salaried Employees
Salaried employees should not calculate tax simply by applying the slab rates to their gross salary.
The calculation generally involves:
Gross Salary → Applicable Deductions/Exemptions → Taxable Income → Slab Tax → Rebate/Surcharge/Cess
For eligible salaried taxpayers, the standard deduction can reduce taxable income.
Other income, such as interest income, rental income or capital gains, can also affect the overall tax calculation.
Income Tax on Capital Gains
Capital gains are not always taxed according to the normal income-tax slab rates.
Certain capital gains can be subject to special tax rates and rules.
Therefore, someone with salary income plus capital gains should not simply add all income and apply the normal slab rates.
The nature and date of the transaction can affect the applicable tax treatment.
New Tax Regime for Business Owners
Individuals earning business or professional income can also be subject to the new tax regime, but switching between regimes can have additional rules.
Business and professional taxpayers should carefully evaluate their choice before filing their return, particularly when substantial deductions or business-related tax provisions are involved.
How to Choose Between New and Old Tax Regime
A simple comparison can help.
Step 1: Calculate Total Income
Include salary, business income, interest, rent and other taxable income.
Step 2: Calculate Eligible Deductions
Check deductions and exemptions available under each regime.
Step 3: Calculate Tax Under the New Regime
Apply the applicable slabs and rebate.
Step 4: Calculate Tax Under the Old Regime
Apply eligible deductions and exemptions before applying the old-regime slabs.
Step 5: Add Cess and Surcharge
Apply these where applicable.
Step 6: Compare Final Tax
Choose the regime that is more suitable based on your circumstances and applicable rules.
Common Mistakes Taxpayers Make
Comparing Tax on Gross Salary
Tax is generally based on taxable income, not simply gross salary.
Ignoring Rebate
Eligible taxpayers should consider the applicable rebate before deciding which regime is cheaper.
Assuming Every Deduction Works in the New Regime
Many deductions available under the old regime are restricted or unavailable under the new regime.
Ignoring Special-Rate Income
Capital gains and certain other income may follow different tax rules.
Confusing FY and AY
Income earned during Tax Year/FY 2026–27 generally relates to the return for AY 2027–28.
Frequently Asked Questions
What is the tax-free income limit under the new regime in 2026–27?
The normal new-regime slab starts with nil tax up to ₹4 lakh. In addition, an eligible resident individual can benefit from the applicable rebate where taxable income is within the prescribed limit.
Is income up to ₹12 lakh tax-free?
For eligible resident individuals under the new regime, the applicable rebate can result in zero tax when total taxable income does not exceed ₹12 lakh, subject to the conditions and special-rate income rules.
What is the highest income tax slab?
The highest normal slab rate is 30%. Surcharge may additionally apply at higher income levels.
Which is better, old or new tax regime?
It depends on your income and eligible deductions. Taxpayers with large deductions may benefit from the old regime, while those with fewer deductions may find the new regime more beneficial.
What is the old tax regime limit for senior citizens?
Under the old regime, the basic exemption limit is ₹3 lakh for individuals aged 60 to below 80 and ₹5 lakh for individuals aged 80 years or more.
Is 4% cess included in the slab rates?
No. The 4% Health and Education Cess is generally added after calculating the applicable income tax and surcharge.
Final Words
The Income Tax Slabs for 2026–27 provide taxpayers with two important options: the new tax regime and the old tax regime.
The new regime uses slabs from ₹4 lakh to above ₹24 lakh, with rates ranging from nil to 30%. The old regime continues to offer age-based exemption limits and can be useful for taxpayers with substantial eligible deductions and exemptions.
For most taxpayers, the best approach is not to choose a regime based only on the headline tax rates. Instead, calculate taxable income under both regimes, consider eligible deductions and rebates, and then compare the final tax liability.
Because income-tax rules can change, taxpayers should verify the applicable provisions and filing requirements on the official Income Tax Department portal before filing their return.
