The standard deduction is ₹75,000 under the new tax regime and ₹50,000 under the old one, for the financial year 2026-27. It applies to salary income and to pension. You do not submit a bill, a receipt or a declaration for it. It is subtracted from your salary before tax is worked out, automatically.
Figures as of 17 August 2026, from our tax dataset, cross-checked against the Press Information Bureau releases cited below.
How much is the standard deduction this year?
| Who | New regime (default) | Old regime (opt-in) |
|---|---|---|
| Salaried employee | ₹75,000 | ₹50,000 |
| Pensioner drawing their own pension | ₹75,000 | ₹50,000 |
| Recipient of a family pension | One-third of the pension, capped at ₹25,000 | One-third of the pension, capped at ₹15,000 |
| Business or professional income | Not available | Not available |
The deduction is capped at your salary. If your salary for the year is ₹40,000, your deduction is ₹40,000, not ₹75,000. It cannot create a loss.
Why does the salaried exemption limit come to ₹12.75 lakh?
This is the number people actually search for. Under the new regime, the Section 87A rebate makes total income up to ₹12,00,000 tax-free. Add the ₹75,000 standard deduction on top, and a salaried person can earn ₹12,75,000 before any tax is due.
The Finance Minister put it directly in the Budget for 2025-26: “There will be no income tax payable upto income of Rs. 12 lakh… This limit will be Rs.12.75 lakh for salaried tax payers, due to standard deduction of Rs. 75,000.”
Two cautions. The ₹12 lakh figure excludes special-rate income such as capital gains. And the rebate is a cliff, not a slope. Cross the threshold and the rebate falls away, so a small pay rise can cost more than it pays. Our page on the old versus new regime works through where the switch point sits.
Where do the two figures come from?
The increase was announced in the Budget of July 2024. The Press Information Bureau release of 23 July 2024 says the Finance Minister “proposed to increase the standard deduction for salaried employees from ₹50,000 to ₹75,000. Also, deduction on family pension for pensioners is proposed to be enhanced from ₹15,000 to ₹25,000 under the new tax regime.”
Note the last five words. Both increases are new regime only. The old regime keeps ₹50,000 and ₹15,000.
An official contradiction worth knowing about
The Income Tax Department’s own FAQ page comparing the two regimes still reads: “Standard deduction of Rs.50,000 or the amount of salary, whichever is lower, is available for both old and new tax regimes from AY 2024-25 onwards.” That page is dated to assessment year 2024-25 and has not been refreshed.
It is not wrong for the year it describes. It is simply stale, and it is the first result many readers land on. The PIB releases and the Budget documents are the later and governing statements. We flag the conflict rather than pretend the portal agrees with us.
Do you have to claim the standard deduction?
No. Your employer applies it when computing tax deducted at source. It appears in Form 16 as a deduction from salary. The return forms carry it too, and the pre-filled data usually has it already.
Two things to check anyway. First, that the regime shown in Form 16 is the one you meant to use. Second, that the amount matches the regime. Seeing ₹50,000 while filing under the new regime means something has been keyed wrong. Our guide to Form 16 and Form 26AS covers how to reconcile it.
Does it apply to more than one job?
The deduction is per person, per year, not per employer. If you changed jobs during the year, both employers may have applied ₹75,000 each. Your total tax then comes out short, and you settle the difference when you file.
This is one of the most common reasons a salaried filer suddenly owes tax in July. If you switched jobs, give the new employer your previous salary details so it can deduct correctly. Otherwise plan for the shortfall. Our page on advance tax explains when interest starts running on it.
Who does not get it?
| Item | Details |
|---|---|
| Freelancers and consultants. | Professional fees are business income, not salary. There is no standard deduction. You claim actual expenses instead. |
| Business owners. | Same position. |
| People with only rental or interest income. | House property has its own 30% standard deduction on net annual value. That is a different provision with the same name. |
| Directors paid by professional fee rather than salary. | The label on the payment decides it. |
If your income is mixed, the deduction applies only to the salary or pension part. Our page on CTC versus in-hand salary shows where it lands in the payslip.
A note on section numbers
Older articles cite Section 16(ia) for the standard deduction and Section 57(iia) for the family pension deduction. Those are references to the Income-tax Act, 1961. The Income-tax Act, 2025 renumbered the statute, so the section numbers in current law differ from the ones in most published commentary. The amounts are unchanged. When you quote a section number in a letter to the department, check which Act you are citing.
Frequently asked questions
Is the standard deduction available in the new tax regime?
Yes, at ₹75,000 for salary and pension. It is one of the very few deductions that survives in the new regime. Most Chapter VI-A deductions, including 80C and 80D, do not.
Can pensioners claim the standard deduction?
Yes. Pension from a former employer is taxed as salary, so the same ₹75,000 or ₹50,000 applies. A family pension received by a dependant is different. It is taxed as income from other sources, and the deduction there is one-third of the pension, capped at ₹25,000 under the new regime.
Do I need proof or bills for the standard deduction?
No. That is the point of it. It replaced the old transport and medical reimbursement allowances, which needed receipts. No bills, no declaration, no employer approval.
Can I claim standard deduction and 80C together?
Only under the old regime. There you get ₹50,000 standard deduction plus Section 80C up to ₹1,50,000 and Section 80D for health premiums. Under the new regime you get the larger ₹75,000 but not those deductions.
Does the standard deduction apply to arrears and bonus?
Yes. It is deducted from gross salary, and arrears and bonus form part of gross salary. It does not increase because your salary did. The cap is a flat rupee amount, not a percentage.
Sources
- PIB, “Government makes new tax regime more attractive”, 23 July 2024. Read 6 September 2026.
- PIB, “No income tax on annual income upto Rs. 12 lakh under new tax regime”, Union Budget 2025-26. Read 6 September 2026.
- Income Tax Department, FAQs on new tax versus old tax regime. Read 6 September 2026. Still states ₹50,000 for both regimes, on an AY 2024-25 basis.
- Credsir tax dataset, as of 17 August 2026, financial year 2026-27.
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