Compare New vs Old tax regime with the latest slabs. Under the new regime, income up to ₹12 lakh (₹12.75 lakh for salaried employees) is completely tax-free thanks to the Section 87A rebate — unchanged in Budget 2026.
Latest Tax Slabs — New Regime (FY 2025-26 & FY 2026-27)
| Income Slab | Tax Rate |
|---|
| ₹0 – ₹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% |
Standard Deduction: ₹75,000 (salaried/pensioners) | Section 87A Rebate: Zero tax if taxable income ≤ ₹12,00,000 | Budget 2026 confirmed no change to these slabs for FY 2026-27.
Old Regime Slabs (For Reference)
| Income Slab | Tax Rate |
|---|
| ₹0 – ₹2,50,000 | Nil |
| ₹2,50,001 – ₹5,00,000 | 5% |
| ₹5,00,001 – ₹10,00,000 | 20% |
| Above ₹10,00,000 | 30% |
Standard Deduction: ₹50,000 | Rebate u/s 87A: Zero tax if taxable income ≤ ₹5,00,000 | Allows 80C, 80D, HRA, home loan interest and other deductions.
New vs Old Regime — Which Should You Choose?
| Your Situation | Better Regime |
|---|
| Income up to ₹12.75 lakh (salaried) | New Regime (zero tax) |
| Few or no deductions claimed | New Regime |
| High 80C + HRA + home loan interest (₹3.5L+ total deductions) | Old Regime |
| Rent-paying employee in a metro with high HRA | Compare both — Old often wins |
As a rule of thumb: if your total eligible deductions under the old regime exceed roughly ₹4-4.5 lakh, the old regime typically results in lower tax. Below that, the new regime usually wins due to its lower rates and larger rebate ceiling.
Frequently Asked Questions
Is income up to ₹12 lakh really tax-free in the new regime?
Yes. Under the Finance Act 2025 (applicable for FY 2025-26 and unchanged for FY 2026-27), a resident individual with net taxable income up to ₹12,00,000 pays no tax in the new regime due to the Section 87A rebate. Salaried employees get an extra ₹75,000 standard deduction, so gross salary up to ₹12,75,000 can be tax-free.
Did tax slabs change in Budget 2026?
No. Budget 2026 (presented February 2026) made no changes to income tax slabs, rates, standard deduction, Section 87A rebate, surcharge or cess under either regime — the FY 2025-26 slabs continue unchanged for FY 2026-27.
What is marginal relief?
If your income is just above the ₹12 lakh rebate threshold, marginal relief ensures your tax doesn't exceed the amount by which your income exceeds ₹12 lakh — preventing a sudden jump in tax for a small increase in income.
Can I claim HRA under the new regime?
No. HRA exemption, along with most other exemptions and deductions (except the standard deduction and employer NPS contribution), is not available under the new regime.
What is Section 87A rebate?
A rebate that reduces your tax liability to zero if your taxable income doesn't exceed the threshold — ₹12,00,000 under the new regime or ₹5,00,000 under the old regime for FY 2025-26/2026-27.
Is the new tax regime the default now?
Yes. Since FY 2023-24, the new regime is the default. You must explicitly opt for the old regime (via Form 10-IEA for business income, or a simple choice while filing ITR for salaried individuals) if you want to use it.
What is the employer NPS deduction limit under the new regime?
Employer contributions to NPS under Section 80CCD(2) are deductible up to 14% of basic salary under the new regime (increased from 10% in Budget 2024) — this is one of the few deductions still available in the new regime.
What are the surcharge rates for high income?
10% surcharge for income above ₹50 lakh, 15% above ₹1 crore, 25% above ₹2 crore under the new regime (capped at 25%, unlike the old regime which can go up to 37%). A 4% health and education cess applies on top of tax + surcharge.
Can I switch between regimes every year?
Salaried individuals with no business income can switch between new and old regime every financial year when filing their ITR. Those with business/professional income have more restrictions on switching back once they opt out of the new regime.
Does this calculator account for capital gains or other income types?
No, this calculator estimates tax on salary/regular income only using slab rates. Capital gains (equity, property, etc.) are taxed under separate rules and rates — consult a tax professional or use a dedicated capital gains calculator for those.
Tax slabs and rules are current as of Budget 2026 (February 2026) for FY 2025-26 and FY 2026-27. Tax laws can change — verify with the official Income Tax Department website or a tax professional before filing.