How income tax is calculated in tax year 2026-27
For tax year 2026-27 (FY 2026-27), the new tax regime is the default (it has been the default since FY 2023-24, under Finance Act 2023). You can still opt for the old regime if your deductions make it cheaper. The slabs, the Rs 60,000 rebate, the Rs 75,000 standard deduction and the surcharge rates are unchanged from FY 2025-26, when the new regime slabs were last revised in Budget 2025. Budget 2026 did not change them.
New regime slabs (FY 2026-27)
| Taxable income | Rate |
|---|---|
| Up to Rs 4,00,000 | Nil |
| Rs 4,00,001 to Rs 8,00,000 | 5% |
| Rs 8,00,001 to Rs 12,00,000 | 10% |
| Rs 12,00,001 to Rs 16,00,000 | 15% |
| Rs 16,00,001 to Rs 20,00,000 | 20% |
| Rs 20,00,001 to Rs 24,00,000 | 25% |
| Above Rs 24,00,000 | 30% |
Same slabs for all ages. Standard deduction Rs 75,000 for salaried and pensioners. Section 87A rebate up to Rs 60,000, so taxable income up to Rs 12,00,000 pays zero tax.
Old regime slabs (below 60)
| Taxable income | Rate |
|---|---|
| Up to Rs 2,50,000 | Nil |
| Rs 2,50,001 to Rs 5,00,000 | 5% |
| Rs 5,00,001 to Rs 10,00,000 | 20% |
| Above Rs 10,00,000 | 30% |
Basic exemption is Rs 3,00,000 for ages 60 to 80 and Rs 5,00,000 for 80 and above. Standard deduction Rs 50,000. Rebate up to Rs 12,500, so taxable income up to Rs 5,00,000 pays zero tax. You can also claim 80C, 80D, HRA, home-loan interest and more.
The Rs 12 lakh vs Rs 12.75 lakh point
Two different figures, do not mix them up. Taxable income up to Rs 12,00,000 pays zero tax under the new regime because of the Rs 60,000 rebate. A salaried person also gets the Rs 75,000 standard deduction first, so a gross salary up to Rs 12,75,000 drops to Rs 12,00,000 taxable and is also tax free. The Rs 12.75 lakh headline is only because of the standard deduction.
Marginal relief: just above Rs 12 lakh, relief caps your tax so it cannot exceed the income above Rs 12,00,000. This prevents a tax cliff and fades out by about Rs 12,70,000 of taxable income.
Surcharge and cess
- Surcharge applies above Rs 50 lakh total income: 10% (Rs 50L to 1cr), 15% (1cr to 2cr), 25% (2cr to 5cr).
- Above Rs 5 crore: 37% under the old regime, capped at 25% under the new regime.
- Marginal relief on surcharge applies at each threshold so the extra surcharge does not exceed the income above it.
- A 4% health and education cess is added on tax plus surcharge, for everyone, under both regimes.
Order of computation (what this tool does)
Under the new regime, the only subtractions are the Rs 75,000 standard deduction (for salaried and pensioners) and employer NPS (this tool has no employer NPS field; the TDS on salary calculator does). Under the old regime, you also subtract 80C (max Rs 1,50,000), 80D, HRA exemption, home-loan interest (max Rs 2,00,000), 80CCD(1B) (max Rs 50,000) and other eligible deductions. The calculator runs both regimes and shows the cheaper one, your effective rate, and an estimated monthly TDS (annual tax divided by 12).
Worked example: Rs 15 lakh salary
A salaried employee below 60 earns Rs 15,00,000 a year, invests Rs 1,50,000 under 80C and pays Rs 25,000 of health insurance (80D). These are the sample values loaded in the calculator above.
| Step | New regime | Old regime |
|---|---|---|
| Gross salary | Rs 15,00,000 | Rs 15,00,000 |
| Standard deduction | − Rs 75,000 | − Rs 50,000 |
| 80C + 80D | not allowed | − Rs 1,75,000 |
| Taxable income | Rs 14,25,000 | Rs 12,75,000 |
| Slab tax | 20,000 + 40,000 + 33,750 = Rs 93,750 | 12,500 + 1,00,000 + 82,500 = Rs 1,95,000 |
| Rebate | nil (income above Rs 12 lakh) | nil (income above Rs 5 lakh) |
| 4% cess | Rs 3,750 | Rs 7,800 |
| Total tax | Rs 97,500 | Rs 2,02,800 |
The new regime is cheaper here by Rs 1,05,300. The old regime would need roughly Rs 3.7 lakh more in deductions (HRA, home loan interest and so on) to catch up.
Which calculator do I need?
- Income tax calculator (this page): your total tax for the year and which regime is cheaper. Use it when choosing a regime or planning the year.
- TDS on salary calculator: how much your employer should deduct from each month's pay, including mid-year joiners and TDS already deducted.
- Advance tax calculator: tax on income your employer does not deduct for (rent, interest, capital gains, freelance), the four instalment dates and interest for paying late.
Which Act applies? The Income-tax Act, 2025 replaced the Income-tax Act, 1961 from 1 April 2026. Income earned from April 2026 to March 2027 falls in tax year 2026-27, which is what used to be called FY 2026-27 (AY 2027-28). Deduction names such as 80C, 80D and 80CCD on this page use the 1961 Act numbering most people know. The 2025 Act renumbers them, for example 80C is now Section 123, the rebate in Section 87A is now Section 156 and the new regime in Section 115BAC is now Section 202. Use the official section navigator to look up any other section.
Is income up to Rs 12 lakh really tax free in FY 2026-27?
Yes, under the new regime. Taxable income up to Rs 12,00,000 pays zero tax because of the rebate (Section 156 of the 2025 Act, earlier Section 87A) of up to Rs 60,000. A salaried person gets the Rs 75,000 standard deduction first, so a gross salary up to Rs 12,75,000 reduces to Rs 12,00,000 taxable and is also tax free. Rs 12 lakh is taxable income, Rs 12.75 lakh is gross salary.
What is the standard deduction in the new regime?
Rs 75,000 for salaried individuals and pensioners under the new regime, and Rs 50,000 under the old regime. It is applied before the slabs.
Which regime is better for me, new or old?
It depends on your deductions. The new regime has lower rates and a larger rebate but disallows most deductions. The old regime has higher rates but allows 80C, 80D, HRA, home-loan interest and more. If your total old-regime deductions are large, the old regime can win, otherwise the new regime usually wins. This tool computes both and shows the cheaper one for your numbers.
Did the slabs change for FY 2026-27?
No. Budget 2026 kept the slabs, rebate, standard deduction and surcharge for tax year 2026-27 the same as FY 2025-26. The new regime slabs were last revised in Budget 2025. What did change is the law they sit in: from 1 April 2026 the Income-tax Act, 2025 applies, so the rebate is now Section 156 (earlier Section 87A) and the new regime is Section 202 (earlier Section 115BAC).
Do senior citizens get a higher exemption in the new regime?
No. The new regime uses the same slabs for all ages with a basic exemption of Rs 4,00,000. The higher exemption for seniors (Rs 3,00,000 for ages 60 to 80) and super seniors (Rs 5,00,000 for 80 and above) applies only under the old regime.
How is this different from the TDS on salary calculator?
This page gives your tax for the whole year and compares regimes. The TDS on salary calculator takes that annual figure and spreads it across the months left in the year, after any TDS already deducted, which is what your employer actually cuts from each payslip.
What does this calculator not cover?
This version covers salary and normal income. It does not compute capital gains taxed at special rates (Sections 111A, 112 and 112A in the 1961 Act numbering), where the rebate and slabs do not apply. Treat the result as an estimate for planning, not a filing, and confirm with a tax professional for your case.
Related tools
- HRA exemption calculator to find the HRA figure for the old-regime deductions box.
- NPS calculator for 80CCD(1B) and employer NPS planning.
- In-hand salary calculator to see take-home pay after tax, PF and professional tax.
- Professional tax calculator for the state tax deducted from salary.
Employers who run payroll for a growing team can also use GetHirePlus to screen and interview candidates before the offer goes out.
Sources
Official sources used for the rates and rules on this page:
- Income Tax Department: Salaried individuals, tax slabs, rebate and new regime default
- Key highlights of Finance Act, 2025 (slabs, Rs 60,000 rebate), incometaxindia.gov.in
- Income-tax Act, 2025 (as amended by Finance Act, 2026), incometaxindia.gov.in
- CBDT FAQs on interplay and transition to the Income-tax Act, 2025
- Income Tax Department: 1961 Act to 2025 Act section navigator
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Disclaimer: This calculator gives an estimate for general guidance only and is not legal, tax, or financial advice. Your actual tax depends on your full income, deductions and the latest law. Consult a tax professional before filing.