Income Tax Calculator (New Regime) FY 2026-27
Use this income tax calculator for the new regime to compute your exact tax liability for FY 2026-27 (AY 2027-28). The calculator applies the latest tax slabs introduced by Budget 2025 and unchanged in Budget 2026, the ₹75,000 standard deduction for salaried individuals and pensioners, and the enhanced Section 87A rebate of ₹60,000 that effectively makes income up to ₹12 lakh tax-free.
For salaried employees, this means a gross salary up to ₹12.75 lakh attracts zero income tax under the new regime — the most generous tax-free threshold in India's history. Enter your income, choose any other heads of income (interest, rental, capital gains), and the calculator shows your tax slab-by-slab, the rebate applied, the 4% cess, and your final liability.
How this calculator works
The new tax regime explained
The new tax regime under Section 115BAC was made the default option from FY 2023-24 onwards. If you don't actively choose the old regime while filing your ITR, you're taxed under the new regime automatically. This regime trades away most of the deductions and exemptions of the old regime in exchange for lower slab rates and a higher rebate threshold.
Income tax slabs for FY 2026-27 (new regime)
Budget 2026 made no changes to the slabs introduced by Budget 2025. The current structure is:
| Income Range | Tax Rate |
|---|---|
| Up to ₹4,00,000 | Nil |
| ₹4,00,001 to ₹8,00,000 | 5% |
| ₹8,00,001 to ₹12,00,000 | 10% |
| ₹12,00,001 to ₹16,00,000 | 15% |
| ₹16,00,001 to ₹20,00,000 | 20% |
| ₹20,00,001 to ₹24,00,000 | 25% |
| Above ₹24,00,000 | 30% |
Standard deduction
Salaried employees and pensioners get a flat ₹75,000 standard deduction in the new regime. Family pensioners get the lower of ₹25,000 or one-third of family pension. The deduction is applied before the slab rates kick in, so it directly reduces the income that gets taxed.
The Section 87A rebate — why ₹12 lakh is tax-free
Section 87A allows resident individuals with taxable income up to ₹12 lakh under the new regime to claim a rebate equal to the lower of (a) the tax computed before cess, or (b) ₹60,000. Because the maximum tax on ₹12 lakh under the slabs is exactly ₹60,000 (5% of ₹4L + 10% of ₹4L = ₹20,000 + ₹40,000), the rebate wipes it out entirely. Add the ₹75,000 standard deduction and salaried gross income up to ₹12.75 lakh attracts zero tax.
Marginal relief
If your taxable income slightly exceeds ₹12 lakh — say ₹12.5 lakh — without marginal relief you'd jump from zero tax to roughly ₹67,500. Marginal relief caps your additional tax at the income exceeding ₹12 lakh. So at ₹12.5 lakh income, your tax is limited to ₹50,000, not ₹67,500. This prevents the rebate cliff effect.
What the new regime does not allow
The new regime restricts most popular deductions and exemptions, including: Section 80C (₹1.5 lakh investments in PPF, ELSS, life insurance, EPF), Section 80D (medical insurance), Section 80G (donations), HRA exemption, LTA exemption, home loan interest under Section 24(b) for self-occupied property, professional tax, and entertainment allowance. Only a small list survives — the standard deduction itself, employer NPS contribution under 80CCD(2), Agniveer Corpus Fund (80CCH), interest on home loan for let-out property, and a few others.
4% Health and Education Cess
After the slab tax minus rebate, a 4% cess is added on the final tax amount. This applies under both regimes and to all income brackets.
Surcharge on high incomes
For taxable income above ₹50 lakh, surcharge applies on the tax amount: 10% (₹50L-1Cr), 15% (₹1-2Cr), 25% (₹2-5Cr). The new regime caps the maximum surcharge at 25%, while the old regime can go up to 37% — a key advantage for ultra-high earners under the new regime.
Worked example
Example 1 — Salaried employee earning ₹12 lakh:
- Gross salary: ₹12,00,000
- Less: Standard deduction: ₹75,000
- Taxable income: ₹11,25,000
- Tax computation: First ₹4L → ₹0; ₹4-8L (5% on ₹4L) → ₹20,000; ₹8-11.25L (10% on ₹3.25L) → ₹32,500
- Total tax before rebate: ₹52,500
- Section 87A rebate (income < ₹12L): −₹52,500
- Tax after rebate: ₹0
- 4% cess: ₹0
- Total tax payable: ₹0
Example 2 — Salaried employee earning ₹15 lakh:
- Gross salary: ₹15,00,000
- Less: Standard deduction: ₹75,000
- Taxable income: ₹14,25,000
- Tax: ₹0 (first 4L) + ₹20,000 (next 4L at 5%) + ₹40,000 (next 4L at 10%) + ₹33,750 (next 2.25L at 15%)
- Tax before cess: ₹93,750
- 4% cess: ₹3,750
- Total tax payable: ₹97,500
Example 3 — Salaried employee earning ₹25 lakh:
- Gross salary: ₹25,00,000; less standard deduction ₹75,000
- Taxable income: ₹24,25,000
- Tax: ₹20,000 + ₹40,000 + ₹60,000 (12-16L at 15%) + ₹80,000 (16-20L at 20%) + ₹1,00,000 (20-24L at 25%) + ₹7,500 (above 24L at 30%)
- Tax before cess: ₹3,07,500; cess ₹12,300
- Total tax payable: ₹3,19,800
Frequently asked questions
Is the new tax regime mandatory for FY 2026-27?
No, but it is the default. If you don't actively choose the old regime when filing your ITR, you will be taxed under the new regime automatically. Salaried employees can switch between regimes every year. Business and professional taxpayers can switch only once in a lifetime — choose carefully.
What happens if my income is ₹12,01,000 — do I lose the entire ₹60,000 rebate?
No. Marginal relief kicks in. Without it, you would jump from zero tax to about ₹60,500 — paying more tax than the extra ₹1,000 you earned. Marginal relief caps your additional tax at the income exceeding ₹12 lakh, so at ₹12,01,000 you pay just ₹1,000 in tax (plus 4% cess).
Does the ₹12 lakh tax-free limit apply to capital gains?
No. The Section 87A rebate of ₹60,000 does not apply to income taxed at special rates such as short-term capital gains under Section 111A (20% on listed equity) or long-term capital gains under Section 112A (12.5% above ₹1.25 lakh on listed equity). Even if your total income is below ₹12 lakh, you must pay tax on these special-rate incomes.
Can I claim 80C deductions under the new regime?
No. PPF, ELSS, life insurance premium, EPF voluntary contributions, NSC, and other 80C investments do not give a tax deduction under the new regime. The same applies to 80D (medical insurance), 80G (donations), HRA, LTA, and home loan interest for self-occupied property. Only employer NPS contribution under 80CCD(2) (up to 14% of basic+DA) and a few minor heads remain available.
Is the new regime always better?
It depends on your deduction profile. Salaried employees who don't maximise 80C/80D/HRA usually benefit from the new regime. If you have a large home loan (₹2 lakh+ interest), live on rent in a metro (large HRA), maximise 80C and 80D, and contribute to NPS — the old regime can save more. Run both calculators and compare your final tax liability.
How is income tax calculated for senior citizens under the new regime?
Under the new regime, the same slabs apply to all age groups — there is no enhanced basic exemption for senior or super-senior citizens. The old regime offers ₹3 lakh basic exemption for senior citizens (60-79 years) and ₹5 lakh for super seniors (80+), making the old regime often more attractive for retirees with pension and interest income.
What is the surcharge on income above ₹50 lakh?
Surcharge applies on the tax amount (not income): 10% for income ₹50L-1Cr, 15% for ₹1-2Cr, 25% for ₹2-5Cr, and 25% for above ₹5Cr in the new regime (capped at 25%). The old regime can go up to 37% surcharge — making the new regime preferable for ultra-high earners.
Do I have to pay advance tax under the new regime?
Yes. Advance tax rules apply identically under both regimes. If your total tax liability exceeds ₹10,000 in a financial year, you must pay advance tax in four instalments (15 June, 15 September, 15 December, 15 March). Senior citizens without business income are exempt from advance tax.
Can I claim HRA or home loan benefits under the new regime?
HRA exemption under Section 10(13A) is not available in the new regime. Home loan interest under Section 24(b) is allowed only for let-out (rented) property, not self-occupied. If you're a tenant in a high-rent metro or have a home loan on your residence, the old regime usually saves more tax for you.
What if I have capital gains plus salary — how is tax computed?
The new regime slabs apply to your salary and other regular income (after standard deduction). Capital gains are taxed separately at the special rates — STCG on equity at 20%, LTCG on equity at 12.5% above ₹1.25 lakh annual exemption, property LTCG at 12.5%. The Section 87A rebate applies only to the slab-rate portion of tax, not to special-rate income.