The income tax slabs for FY 2026-27 (Assessment Year 2026-27) changed significantly after Union Budget 2025. The New Tax Regime was revised with lower rates and a higher zero-tax threshold, making it the default regime for all taxpayers. If you’re trying to figure out how much tax you owe this year — or planning your salary structure — this is the complete reference guide you need.

This article covers the New Regime slabs (revised), the Old Regime slabs, surcharge rates, cess, the Section 87A rebate limits, tax computation formulas, and worked examples for incomes ranging from ₹8 lakh to ₹50 lakh. Use CalcDesk’s free Income Tax Calculator to compute your exact liability in under 30 seconds.

New Regime Income Tax Slabs FY 2026-27 (Revised in Budget 2025)

The New Regime slabs were revised in Union Budget 2025 to provide greater relief to the middle class. These are the slabs applicable for income earned between 1 April 2025 and 31 March 2026:

Standard deduction: ₹75,000 for salaried employees and pensioners (deducted before applying slabs). Sec 87A rebate: Full tax rebate (up to ₹60,000) if taxable income ≤ ₹12 lakh — meaning zero tax for income up to ₹12.75 lakh gross for salaried. Add 4% Health and Education Cess on tax after rebate.

Old Regime Income Tax Slabs FY 2026-27

The Old Regime slabs remain unchanged. However, the Old Regime allows a wide range of deductions that can substantially reduce your taxable income:

Standard deduction: ₹50,000 for salaried/pensioners. Sec 87A rebate: Up to ₹12,500 if taxable income ≤ ₹5 lakh. Add 4% cess. Deductions available: HRA (Sec 10(13A)), 80C (₹1.5L), 80CCD(1B) NPS (₹50K), 80D health insurance, home loan interest Sec 24(b) (₹2L), LTA, and many others.

Senior Citizen and Super Senior Citizen Slabs

Senior citizens (age 60–79) and super senior citizens (80+) get a higher basic exemption limit under the Old Regime only. Under the New Regime, same slabs apply to all ages:

How to Calculate Income Tax — Step by Step

Surcharge Rates FY 2026-27

Surcharge is an additional tax on the income tax amount (not on income). It applies only for higher incomes:

The 25% surcharge cap in the New Regime is a major advantage for incomes above ₹5 crore, bringing the effective top marginal rate to approximately 39% instead of 42.74% in Old Regime.

Worked Examples — Tax at Different Income Levels

Example 1: ₹8 Lakh Salary (New Regime)

Example 2: ₹15 Lakh Salary (New Regime vs Old Regime)

Example 3: ₹30 Lakh Income (New Regime)

Section 87A Rebate — Complete Guide FY 2026-27

Section 87A of the Income Tax Act 1961 provides a rebate that directly reduces your tax liability:

Health and Education Cess — 4% on All Tax

A 4% Health and Education Cess is mandatory on all income tax (including surcharge) for all categories of taxpayers. There are no exemptions. The formula is: Final Tax = (Basic Tax + Surcharge) × 1.04

Key Changes in Income Tax Slabs Budget 2025

Union Budget 2025 (presented on 1 February 2025) brought significant changes to the New Regime:

• Zero-tax threshold doubled: From ₹7 lakh taxable (old) to ₹12 lakh taxable — a massive relief for the middle class
• Sec 87A rebate increased: From ₹25,000 to ₹60,000 under New Regime
• New Regime slabs restructured: More granular 7-slab system vs the earlier 6-slab system
• Standard deduction: Increased to ₹75,000 (from ₹50,000) under New Regime, applicable from FY 2024-25
• Employer NPS contribution: Deduction limit under Sec 80CCD(2) increased to 14% of basic (from 10%) under New Regime

Quick Tax Reference — Tax at Common Income Levels

For a personalised comparison, use the Income Tax Calculator with your actual deductions. Also read the full guide on Old vs New Tax Regime to understand exactly when each regime wins.

TDS on Salary — How Your Employer Deducts Tax

Your employer deducts Tax Deducted at Source (TDS) every month from your salary. The monthly TDS = (Estimated Annual Tax) ÷ 12. Your employer projects your annual income and tax at the start of the year, deducts TDS monthly, and adjusts in the last quarter if needed.

Read the complete TDS Guide for Salaried Employees to understand Form 16, 26AS, and how to reconcile TDS with your ITR. If you’re computing advance tax, visit the Advance Tax guide for due dates and calculation methods.