Income Tax Slabs for FY 2026-27: New and Old Regime

One naming change matters. The Income-tax Act, 2025 came into force on 1 April 2026 and repealed the 1961 Act. It also replaced “assessment year” with “tax year”. So this is tax year 2026-27, and the familiar section numbers have moved.

New regime income tax slabs for FY 2026-27

The new regime is the default. These rates are in section 202(1) of the Income-tax Act, 2025.

Two figures sit alongside the table. The standard deduction for salaried taxpayers and pensioners is ₹75,000. The rebate under section 156(2) is the lower of your tax or ₹60,000, where total income does not exceed ₹12,00,000.

Old regime income tax slabs for FY 2026-27

The old regime must be opted into. It keeps deductions such as 80C, 80D, house rent allowance and home loan interest.

The standard deduction here is ₹50,000. The rebate is ₹12,500, and only where total income does not exceed ₹5,00,000. The higher basic exemption for age exists only in this regime. The new regime gives everyone ₹4,00,000, whatever their age.

How to read the table without losing money

The slabs are marginal. A rate applies only to the income inside that band. Earning ₹8,10,000 does not tax your whole income at 10%. It taxes ₹10,000 at 10%.

The second misreading is more expensive. The ₹12,00,000 figure in the new regime is a rebate ceiling, not an exemption. Cross it by one rupee and the rebate disappears, not just the excess.

The law softens that. Section 156(2)(b) provides marginal relief, capping your tax at the amount by which your income exceeds ₹12,00,000. That relief is in the Act itself, not merely an administrative practice.

A third trap catches investors. The ₹12,00,000 test is on total income, and income taxed at special rates is treated separately. Capital gains do not simply slot into these slabs. See how gold gains are taxed for a worked example of a special rate.

Surcharge and cess: what is added on top

Surcharge is a percentage of your tax, not of your income. It bites only at high incomes, and the two regimes differ at the top.

The new regime caps surcharge at 25%. The old regime still runs to 37% above ₹5 crore. In both regimes, surcharge on the dividend and capital gains portion is capped at 15%.

Health and education cess is 4%. It is charged on income tax plus surcharge. Marginal relief applies to surcharge, but not to cess.

Which regime should you choose?

Run both. The break-even depends entirely on how much you can actually deduct.

The new regime removes almost every deduction. The old regime keeps them, but starts taxing at ₹2,50,000 and reaches 30% at ₹10,00,000. If your deductions are thin, the new regime wins easily. If you have a large home loan interest claim and a full 80C, the old regime can still win.

The mechanics of choosing differ by income type. Under section 202(4) the new regime is the default. If you have business or professional income, the option must be exercised on or before the due date under section 263(1). It then applies to later years, may be withdrawn only once, and after withdrawal you cannot go back while you still have business income.

If you have no business income, you choose year by year, along with your return. We are not naming a form number. The Income-tax Rules, 2026 replaced the earlier rules and we could not confirm the current form. Pages still referring to Form 10-IEA are legacy content.