Income Tax Slab Rates for Tax Year 2026-27: New Regime vs Old Regime

The new regime is now the default. If you do nothing, that is the regime you are taxed under. The old regime still exists, but you have to actively choose it, and for a growing majority of taxpayers choosing it no longer pays.

These are the rates for tax year 2026-27 under the Income-tax Act, 2025.

New regime slab rates

Total income	Rate
Up to Rs 4,00,000	Nil
Rs 4,00,001 to Rs 8,00,000	5%
Rs 8,00,001 to Rs 12,00,000	10%
Rs 12,00,001 to Rs 16,00,000	15%
Rs 16,00,001 to Rs 20,00,000	20%
Rs 20,00,001 to Rs 24,00,000	25%
Above Rs 24,00,000	30%

The same slabs apply regardless of age. The higher basic exemption that senior and super senior citizens get under the old regime does not exist here.

The rebate is what makes twelve lakh tax-free

A resident individual whose total income does not exceed Rs 12,00,000 gets a rebate of the whole tax or Rs 60,000, whichever is less. The rebate provision, formerly Section 87A, is now Section 202 of the Income-tax Act, 2025.

Add the standard deduction of Rs 75,000 available to a salaried taxpayer under the new regime, and a salary of roughly Rs 12,75,000 can come out with no tax payable.

Two things about the rebate that catch people out. It applies to total income, not to salary, so other income pushes you over. And it is a cliff, not a taper: at Rs 12,00,001 the rebate is gone. Marginal relief exists to soften the step immediately above the threshold, but the planning point stands — income just over twelve lakh is worth managing.

Old regime slab rates

Available only if you opt for it.

Total income	Below 60	60 to 80	80 and above
Up to Rs 2,50,000	Nil	Nil	Nil
Rs 2,50,001 to Rs 3,00,000	5%	Nil	Nil
Rs 3,00,001 to Rs 5,00,000	5%	5%	Nil
Rs 5,00,001 to Rs 10,00,000	20%	20%	20%
Above Rs 10,00,000	30%	30%	30%

Standard deduction under the old regime is Rs 50,000. The rebate under the old regime is the whole tax or Rs 12,500, whichever is less, where total income does not exceed Rs 5,00,000.

Surcharge and cess

Surcharge applies on the tax, once total income crosses Rs 50 lakh:

• Above Rs 50 lakh up to Rs 1 crore: 10%
• Above Rs 1 crore up to Rs 2 crore: 15%
• Above Rs 2 crore: 25% under the new regime

The old regime retains a higher top surcharge of 37% above Rs 5 crore. Under the new regime the highest surcharge is capped at 25%, which is one of the reasons the new regime often wins at the very top of the income scale as well as at the bottom.

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

Marginal relief applies at each surcharge threshold, so that the additional tax does not exceed the additional income.

So which regime should you choose

There is no general answer, only a computation. But the shape of it is predictable.

The new regime usually wins where you have few deductions: no home loan, modest insurance, no large 80C-type investments, renting without a big HRA claim. It also wins for most people up to around twelve lakh, because the rebate wipes out the tax entirely.

The old regime can still win where the deductions are large and real: substantial home loan interest, a full Section 123 investment (formerly 80C), health insurance for yourself and parents, an education loan, a genuine HRA claim in a metro. The threshold at which it overtakes the new regime rises as the new regime slabs widen, which is why a comparison that was done two years ago should not be relied on now.

Run both. It takes minutes and the difference is frequently five figures.

How and when you choose

A taxpayer without business or professional income — most salaried people — can choose afresh every year, at the time of filing. You are not locked in by what you told your employer for TDS purposes; the return is where the choice is finally made, and TDS is adjusted through the refund or the balance payable.

A taxpayer with business or professional income has a much more restricted right. The option to move out of the default regime is exercised through the prescribed form, and having exercised and withdrawn it once, the ability to switch back is limited. For a business taxpayer the first choice therefore matters a great deal more.

See our note on the form used to opt out of the default regime.

Deduction section numbers have changed

If you are comparing regimes using an older article, note that the deduction sections were renumbered from 1 April 2026. Chapter VI-A became Chapter VIII: 80C is now Section 123, 80CCD is Section 124, 80D is Section 126, 80E is Section 129, 80G is Section 133, and 80TTA and 80TTB are now Section 153. The substance is largely unchanged; the references are not.

Get the comparison done on your numbers

We compute both regimes on your actual figures, check which deductions you are genuinely entitled to, and file under whichever regime leaves you better off. For business taxpayers we model the effect over several years, because the switch is not freely reversible.

See income tax filing, the guide for salaried employees, and the document checklist. Book a call, or sign in at the TAXAJ client portal.

Rates, thresholds and the rebate are amended by each Finance Act. This article states the position for tax year 2026-27; confirm the current year’s figures before relying on them, and take advice on your own circumstances.