New vs old tax regime for tax year 2026-27

For an individual, tax can be computed under the new regime (the default; section 115BAC of the Income-tax Act, 1961, now section 202 of the Income-tax Act, 2025) or the old regime (with deductions and exemptions). The slabs below apply to tax year 2026-27 (financial year 2026-27) for residents below 60. Slabs were unchanged from the previous year.

New regime

• Rebate: no tax if taxable income is up to ₹12,00,000 (rebate of up to ₹60,000 under section 87A, now section 156). Above that, marginal relief limits the tax to the amount by which income exceeds ₹12,00,000.
• Standard deduction: ₹75,000 for salaried persons and pensioners.
• Most deductions and exemptions (80C, now section 123; HRA; home loan interest on a self-occupied house) are not available. The employer's NPS contribution (80CCD(2), now section 124) is still allowed.

Old regime

• Rebate: up to ₹12,500 if taxable income is up to ₹5,00,000 (section 87A, now section 156).
• Standard deduction: ₹50,000 for salaried persons and pensioners.
• Deductions such as section 80C (now section 123, up to ₹1,50,000), 80D (now section 126), HRA and home loan interest remain available.

Surcharge and cess

Surcharge applies above ₹50 lakh of income, and the new regime caps it at 25%, while the old regime goes up to 37%. Health and education cess of 4% applies in both.

Worked examples (resident, below 60, salaried)

All figures include the standard deduction and 4% cess.

At these levels the new regime gives lower tax unless deductions are unusually large. Your result depends on your own figures.

Marginal relief near ₹12 lakh. Under the new regime, if taxable income is ₹12,10,000, slab tax is ₹61,500, but marginal relief limits it to ₹10,000 (the income above ₹12,00,000), before cess.

How to choose

1. List your deductions and exemptions honestly, with proof.
2. Compare the tax under both regimes. The income tax calculator does this.
3. Remember the switching rules: salaried individuals can choose each year in the return. A person with business income who opts out of the new regime can come back to it only once, and then cannot opt out again while they have business income. Under the 1961 Act the opt-out is made in Form 10-IEA; under the 2025 Act there is no separate form, and it is made in the return itself (section 202(4) and rule 136 of the Income-tax Rules, 2026).

Old and new section numbers

The Income-tax Act, 2025 governs tax year 2026-27 onwards; returns for FY 2025-26 and earlier are filed under the 1961 Act. The rates above apply under both. The section numbers differ:

See the old and new section finder for more.