Reviewed October 2026
Old vs new tax regime for FY 2026-27, explained
From 1 April 2026, income tax is governed by the new Income-tax Act, 2025, but the slabs, standard deduction and rebate are the same as FY 2025-26. The new regime is the default; salaried employees can still choose the old regime every year when filing.
This calculator works out your tax under both regimes — including the rebate, marginal relief, surcharge and 4% cess — and tells you which one costs less.
New regime slabs (FY 2026-27)
Salaried individuals get a ₹75,000 standard deduction. A rebate of up to ₹60,000 (section 87A of the old Act, section 156 of the new Act) makes tax nil when taxable income is ₹12 lakh or less — so salary up to ₹12.75 lakh is tax-free.
| Taxable income | Rate |
|---|---|
| Up to ₹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% |
Old regime slabs
The old regime keeps deductions such as 80C (₹1.5 lakh), 80D health insurance, home loan interest (₹2 lakh), HRA and 80CCD(1B) NPS (₹50,000), with a ₹50,000 standard deduction and a ₹12,500 rebate up to ₹5 lakh taxable income.
| Taxable income | Below 60 | 60–80 | 80+ |
|---|---|---|---|
| Up to ₹2,50,000 | Nil | Nil | Nil |
| ₹2,50,001 – ₹3,00,000 | 5% | Nil | Nil |
| ₹3,00,001 – ₹5,00,000 | 5% | 5% | Nil |
| ₹5,00,001 – ₹10,00,000 | 20% | 20% | 20% |
| Above ₹10,00,000 | 30% | 30% | 30% |
Marginal relief just above ₹12 lakh
Without relief, earning ₹1 over ₹12 lakh would cost you ₹60,000 in tax. Marginal relief caps your tax at the amount by which your income exceeds ₹12 lakh. For example, a salary of ₹12,85,000 (₹12,10,000 taxable) would owe ₹61,500 on the slabs, but marginal relief cuts it to ₹10,000 + cess = ₹10,400. Relief applies until taxable income of about ₹12.7 lakh.
Which regime is better?
It depends on your deductions. The table shows the extra deductions (over and above the standard deduction) you'd need in the old regime just to match the new regime, for a person under 60:
| Gross salary | New regime tax | Old-regime deductions needed to break even |
|---|---|---|
| ₹12,75,000 | ₹0 | Old regime can't beat nil tax |
| ₹15,00,000 | ₹97,500 | ≈ ₹5.44 lakh |
| ₹20,00,000 | ₹1,92,400 | ≈ ₹7.08 lakh |
| ₹25,00,000+ | ₹3,19,800 at ₹25L | ≈ ₹8 lakh |
Surcharge and cess
- Surcharge: 10% above ₹50 lakh, 15% above ₹1 crore, 25% above ₹2 crore. Above ₹5 crore it's 37% in the old regime but capped at 25% in the new regime.
- Marginal relief also applies to surcharge, so crossing a threshold never costs more than the extra income.
- 4% health and education cess is charged on tax plus surcharge, and the final tax is rounded to the nearest ₹10.
Frequently asked questions
Is income up to ₹12 lakh tax-free in FY 2026-27?
Yes, under the new regime: taxable income up to ₹12 lakh has nil tax after the rebate. For salaried people, the ₹75,000 standard deduction makes gross salary up to ₹12.75 lakh tax-free.
Did Budget 2026 change the tax slabs?
No. The FY 2026-27 slabs, standard deduction and rebate are unchanged from FY 2025-26. What changed is the law itself: the Income-tax Act, 2025 replaced the 1961 Act from 1 April 2026.
Can I switch between old and new regime?
Salaried individuals without business income can choose either regime every year when filing their return. Those with business income can switch back to the old regime only once.
Is the employer NPS contribution deductible in the new regime?
Yes. The employer's contribution under 80CCD(2) is deductible in both regimes — up to 14% of basic + DA in the new regime and 10% in the old regime for private-sector employees.
Does the rebate apply to capital gains?
The rebate can't be used against tax on special-rate income such as equity capital gains. This calculator covers salary income only.