New Tax Slabs 2026: Complete Guide for Salaried Employees in India

1. Why the New Tax Slabs Matter in 2026

If you're a salaried employee in India, your tax slab decides how much of your hard-earned salary you actually get to keep. Every year, lakhs of people either overpay tax simply because they didn't check the latest slabs, or they miss out on savings because they stuck with the wrong regime out of habit.

For FY 2025-26 (Assessment Year 2026-27), the New Tax Regime continues to be the default option, and it comes with wider slabs, a higher rebate, and a bigger standard deduction than what most people remember from a few years ago. The Union Budget 2026 made no further changes to these rates, so the numbers in this guide apply right now, for the return you'll file this year.

This matters most if you fall into any of these groups:

• You're a salaried employee trying to figure out your in-hand salary for the year
• You're a fresher who just started working and has never filed a return before
• You have investments, HRA, or a home loan and aren't sure if the Old Regime still saves you more
• You're a high earner wondering how the new slabs affect your surcharge and overall tax

By the end of this guide, you'll know exactly where you stand — with real numbers, not guesswork. We'll walk through the full slab table, explain the standard deduction and Section 87A rebate in plain language, run through five real salary examples, compare the Old and New regimes side by side, and answer the questions people actually ask when tax season rolls around.

2. New Tax Slabs 2026 (FY 2025-26 / AY 2026-27)

Here is the complete slab structure under the New Tax Regime, which remains the default regime for all individual taxpayers unless you actively choose otherwise:

These rates apply uniformly to everyone — there's no separate slab for senior or super senior citizens under the New Regime, unlike the Old Regime. Add a flat 4% Health and Education Cess on top of the final tax amount, and a surcharge if your income crosses ₹50 lakh.

Want to see your own numbers instantly? Try Numvexa's Income Tax Calculator — just enter your salary and it does the slab-by-slab math for you.

3. What Changed in 2026?

If you haven't checked your tax slab in a year or two, here's a quick catch-up on what's different now compared to the older New Regime structure:

• Basic exemption limit raised to ₹4 lakh — up from ₹3 lakh in the earlier version of the New Regime.
• Slabs widened across the board — the 5%, 10%, 15%, 20%, and 25% bands now each cover a ₹4 lakh range instead of being bunched closer together.
• Standard deduction increased to ₹75,000 for salaried employees and pensioners choosing the New Regime, up from ₹50,000.
• Section 87A rebate jumped to ₹60,000, up from ₹25,000 earlier — and the income limit to claim it rose all the way to ₹12 lakh, up from ₹7 lakh.
• Effective tax-free salary for salaried employees is now ₹12.75 lakh (₹12 lakh rebate limit + ₹75,000 standard deduction), a meaningful jump from previous years.

For most salaried employees earning under ₹12.75 lakh a year, this combination means zero tax liability — something that simply wasn't true a few years back at the same income level.

4. Standard Deduction Explained

The standard deduction is a flat amount subtracted from your gross salary before tax is calculated — no bills, receipts, or proof needed. It exists purely to give salaried employees a small, automatic cushion.

• Who can claim it: Any salaried employee or pensioner, regardless of which regime they choose.
• Amount in New Regime: ₹75,000 per year.
• Amount in Old Regime: ₹50,000 per year.
• How it's applied: It's deducted directly from your gross salary to arrive at your taxable salary income — before any slab rates are applied.

Real example: Suppose your gross annual salary is ₹9,00,000. Under the New Regime, your taxable salary becomes ₹9,00,000 − ₹75,000 = ₹8,25,000. That ₹75,000 isn't taxed at all — it simply disappears from your taxable income, which is why it matters so much for middle-income earners.

5. Section 87A Rebate Explained

The Section 87A rebate is what actually brings tax down to zero for a large number of salaried Indians — even though tax is technically calculated using the slabs first.

• Who gets it: Resident individuals (not applicable to NRIs) whose taxable income is up to ₹12,00,000 under the New Regime.
• Maximum rebate available: ₹60,000, or the actual tax payable — whichever is lower.
• Effective tax-free income limit for salaried employees: ₹12,75,000 gross salary (after the ₹75,000 standard deduction brings taxable income to ₹12 lakh).
• Marginal relief: If your income is just slightly above ₹12 lakh, your tax is capped at the amount by which your income exceeds ₹12 lakh — so a small overshoot doesn't suddenly cost you a huge tax bill.

Real example: A salaried employee with a taxable income of exactly ₹12,00,000 would owe ₹60,000 in tax as per the slabs. The Section 87A rebate of ₹60,000 then cancels this out completely — final tax payable is ₹0 (before cess, which also becomes nil since there's no base tax left).

This rebate is exactly what makes a ₹12.75 lakh salary fully tax-free in the New Regime, and it's worth checking your own number using the Income Tax Calculator on Numvexa.

6. Real-Life Tax Examples

Numbers make this far easier to understand than rules alone. Here's how tax actually works out at five common salary levels under the New Regime for FY 2025-26.

Example 1: Gross Salary ₹6,00,000

• Standard deduction: ₹75,000
• Taxable income: ₹5,25,000
• Tax as per slabs: 5% on (₹5,25,000 − ₹4,00,000) = ₹6,250
• Section 87A rebate: ₹6,250 (fully cancels the tax, since income is under ₹12 lakh)
• Final tax payable: ₹0

Example 2: Gross Salary ₹10,00,000

• Standard deduction: ₹75,000
• Taxable income: ₹9,25,000
• Tax as per slabs: 5% on ₹4L (₹20,000) + 10% on (₹9,25,000 − ₹8,00,000 = ₹1,25,000) = ₹20,000 + ₹12,500 = ₹32,500
• Section 87A rebate: ₹32,500 (fully cancels the tax)
• Final tax payable: ₹0

Example 3: Gross Salary ₹12,00,000

• Standard deduction: ₹75,000
• Taxable income: ₹11,25,000
• Tax as per slabs: ₹20,000 (5% slab) + ₹40,000 (10% slab) + 15% on (₹11,25,000 − ₹12,00,000 → not applicable, income stays under ₹12L slab) = ₹20,000 + ₹32,500 = ₹52,500
• Section 87A rebate: ₹52,500 (fully cancels the tax)
• Final tax payable: ₹0

Example 4: Gross Salary ₹15,00,000

• Standard deduction: ₹75,000
• Taxable income: ₹14,25,000
• Tax as per slabs: ₹20,000 + ₹40,000 + 15% on (₹14,25,000 − ₹12,00,000 = ₹2,25,000) = ₹20,000 + ₹40,000 + ₹33,750 = ₹93,750
• Section 87A rebate: Not applicable (taxable income above ₹12 lakh)
• Tax after 4% cess: ₹93,750 × 1.04 = ₹97,500

Example 5: Gross Salary ₹20,00,000

• Standard deduction: ₹75,000
• Taxable income: ₹19,25,000
• Tax as per slabs: ₹20,000 + ₹40,000 + ₹60,000 (15% slab) + 20% on (₹19,25,000 − ₹16,00,000 = ₹3,25,000) = ₹20,000 + ₹40,000 + ₹60,000 + ₹65,000 = ₹1,85,000
• Section 87A rebate: Not applicable
• Tax after 4% cess: ₹1,85,000 × 1.04 = ₹1,92,400

Notice the jump — anyone earning up to ₹12.75 lakh gross pays zero tax, but the moment you cross that line, tax applies to your entire taxable income at the relevant slab rates (with marginal relief cushioning only a small overshoot near the ₹12 lakh mark).

7. Old vs New Tax Regime Comparison

The cleanest way to decide is to run your own numbers through both regimes using the Income Tax Calculator — it takes less than a minute and removes the guesswork entirely.

8. Who Should Choose the New Tax Regime?

• Freshers: With little to no investments yet, the higher basic exemption and bigger rebate almost always make the New Regime the better starting point.
• Salaried employees earning up to ₹12.75 lakh: This group typically pays zero tax under the New Regime, regardless of how much they invest, since the rebate wipes out the liability anyway.
• People without major investments: If you're not maxing out 80C, don't have a home loan, and aren't claiming HRA, the New Regime's lower rates work in your favour.
• High-income earners with modest deductions: Even above ₹24 lakh, if your total deductions are under roughly ₹4-5 lakh, the New Regime's wider, lower slabs usually still beat the Old Regime.
• Home loan holders: This is the one group that needs to actually calculate both. If you're paying significant interest on a self-occupied home loan along with 80C and HRA, the Old Regime can still come out ahead — but only your real numbers will confirm it. Try the HRA Calculator to check your exemption amount first.

A useful way to think about it: the New Regime rewards simplicity. The less paperwork you want to deal with and the fewer large deductions you have, the more it tends to favour you. The Old Regime still has a place, but mainly for people who are already deep into structured tax planning — large EPF and PPF contributions, an active home loan, and HRA on top of that. If that's not your situation, there's a good chance the New Regime is simply the better deal without you having to do anything extra.

9. Common Tax Mistakes Indians Make

• Not checking which regime applies by default: Many employees assume they're still on the Old Regime when their employer has already shifted them to the New Regime (the current default) for TDS purposes.
• Missing eligible deductions in the Old Regime: Forgetting to submit investment proofs, rent receipts, or insurance premium details before the deadline, which leads to higher TDS being deducted than necessary.
• Wrong assumptions about TDS: Assuming "my employer deducted TDS correctly, so I don't need to file a return" — TDS is only an estimate; your actual liability can differ and still needs to be reported.
• Ignoring Form 16 details: Not cross-checking the salary breakup, deductions, and TDS shown in Form 16 against your own records before filing.
• Filing late or not at all: Missing the ITR filing deadline leads to late fees and interest, even if your final tax payable is zero.
• Assuming the New Regime is automatically best without checking: It's the better choice for most people, but not everyone — someone with a large home loan, full 80C investments, and significant HRA can still come out ahead under the Old Regime. The only way to know for sure is to calculate both rather than assume.

If you've recently received your Form 16, our detailed Form 16 guide walks through exactly how to read it and use it while filing.

10. Tax Saving Tips for 2026

• Compare both regimes every year before assuming the same choice still makes sense — your salary, investments, or loan situation may have changed.
• If you're in the Old Regime, use your full 80C limit thoughtfully — EPF, PPF, and ELSS together can fill the ₹1.5 lakh limit without unnecessary last-minute purchases.
• Claim HRA properly with valid rent receipts and, where required, your landlord's PAN — use the HRA Calculator to confirm your exact exemption.
• Check your employer's NPS contribution under Section 80CCD(2) — this remains available even in the New Regime and is often overlooked.
• Plan SIPs for the long term, not just for tax saving — use the SIP Calculator to see how consistent investing grows over time, separate from any tax angle.
• Keep your Form 16, salary slips, and investment proofs organised through the year instead of scrambling in March.

This article is meant to help you understand the rules — for decisions specific to your situation, especially around large investments or business income, it's worth speaking to a qualified Chartered Accountant.

11. Frequently Asked Questions

What are the new tax slabs for FY 2025-26 (AY 2026-27)?

Under the New Tax Regime: income up to ₹4 lakh is nil, ₹4-8 lakh is taxed at 5%, ₹8-12 lakh at 10%, ₹12-16 lakh at 15%, ₹16-20 lakh at 20%, ₹20-24 lakh at 25%, and above ₹24 lakh at 30%. Budget 2026 made no changes, so these slabs continue for FY 2026-27 as well.

Is income up to ₹12 lakh really tax-free in the new regime?

Yes. Tax is first calculated using slab rates, but the Section 87A rebate of up to ₹60,000 then cancels it out completely for taxable income up to ₹12 lakh. For salaried employees, the ₹75,000 standard deduction pushes the effective tax-free gross salary to ₹12.75 lakh.

What is the standard deduction for salaried employees in 2026?

₹75,000 under the New Regime, and ₹50,000 under the Old Regime, for FY 2025-26.

Is the New Tax Regime the default regime now?

Yes, since FY 2023-24. If you prefer the Old Regime, you need to actively choose it while filing your return or inform your employer for TDS purposes.

Can I switch between Old and New tax regimes every year?

Salaried individuals without business income can switch every financial year. Those with business or professional income can switch from New to Old only once and cannot switch back.

What happens if my income is slightly above ₹12 lakh?

Marginal relief applies — your tax is capped at the amount by which your income exceeds ₹12 lakh, so a small overshoot doesn't cause a disproportionately large tax bill.

Are HRA and Section 80C deductions available in the New Regime?

No. HRA, 80C, 80D, and home loan interest on a self-occupied property are not available under the New Regime. It mainly retains the standard deduction and employer's NPS contribution under 80CCD(2).

Which regime is better for someone with a home loan?

It depends on your total deductions. If home loan interest plus 80C plus HRA comfortably exceed ₹4-5 lakh a year, the Old Regime may still save more — but check your own numbers rather than assuming.

Do senior citizens get a higher basic exemption in the New Regime?

No. The New Regime applies the same ₹4 lakh exemption and same slabs to everyone regardless of age. Higher age-based exemptions exist only in the Old Regime.

Will the New Tax Regime slabs change again in FY 2026-27?

As per Budget 2026, the slabs and rates for both regimes were retained without changes for FY 2026-27, so the FY 2025-26 structure continues to apply.

12. Conclusion

The New Tax Regime for FY 2025-26 makes life genuinely simpler for most salaried employees in India — wider slabs, a ₹75,000 standard deduction, and a rebate that wipes out tax entirely up to ₹12.75 lakh gross salary. If your income falls in that range, there's a good chance you owe nothing at all.

If you earn more, or you're carrying a home loan, HRA, and 80C investments, the right move is to actually run the numbers for both regimes rather than guessing. That's exactly what Numvexa's free Income Tax Calculator is built for — enter your salary once and see your tax under both regimes side by side.

A few more tools that pair well with this guide:

• Salary Calculator — see your exact in-hand salary after all deductions
• HRA Calculator — calculate your HRA exemption if you're on the Old Regime
• SIP Calculator — plan your long-term investments alongside your tax decisions

Disclaimer: This article is for informational purposes only and does not constitute professional tax advice. Tax laws are subject to change. Consult a Chartered Accountant for personalised guidance.