Income Tax Slabs for FY 2026-27 (AY 2027-28): What Budget 2026 Changed — and What It Didn’t

By Nitish Bharadwaj · Published Sep 2, 2026 · 6 min

Budget 2026 made no changes to tax slab rates or the basic exemption limit under either regime, so Budget 2025's structure carries forward unchanged into FY 2026-27 (AY 2027-28). Under the new regime, income up to ₹4 lakh is tax-free, slabs rise in 4% steps to 30% above ₹24 lakh, and the 87A rebate keeps income up to ₹12 lakh (₹12.75 lakh for salaried taxpayers) effectively tax-free. The old regime's slabs and ₹12,500 rebate up to ₹5 lakh stay unchanged. This guide lays out both slab tables and the rebate math.

Union Budgets have retrained Indian taxpayers to expect a slab shake-up every February. Budget 2026 broke that pattern on purpose: the Finance Minister made no changes to income tax slab rates or the basic exemption limit in either regime, leaving the structure introduced in Budget 2025 to carry forward unchanged into FY 2026-27 (Assessment Year 2027-28). That's good news for anyone tired of re-learning their bracket every year — but it also means the slabs below aren't new, they're simply confirmed to still apply to the income you're earning right now.

New Tax Regime Slabs — FY 2026-27 (Unchanged from FY 2025-26)

These are the default slabs for most individual taxpayers unless you specifically opt for the old regime. The basic exemption limit stays at ₹4 lakh, and the slab structure moves in fairly even 4-lakh steps up to ₹24 lakh, above which every additional rupee is taxed at 30%.

Old Tax Regime Slabs — FY 2026-27 (Unchanged)

The old regime keeps its lower basic exemption limit of ₹2.5 lakh but remains the only option for taxpayers who want to claim deductions like Section 80C, HRA, or home loan interest under Section 24(b) — none of which are available under the new regime. Senior citizens (60–79) get a higher ₹3 lakh exemption limit, and super senior citizens (80+) get ₹5 lakh, under the old regime specifically; the new regime's ₹4 lakh limit applies uniformly regardless of age.

The Rebate That Actually Decides Who Pays Zero Tax

Slab rates alone overstate what most people actually pay, because Section 87A's rebate wipes out tax entirely below a threshold in both regimes — and that threshold, not the exemption limit, is what most taxpayers should actually track. Under the new regime, the rebate is ₹60,000, which fully cancels tax liability for anyone with taxable income up to ₹12 lakh. Add the ₹75,000 standard deduction available to salaried employees and pensioners under the new regime, and gross salary income can effectively reach ₹12.75 lakh before any tax is due. Under the old regime, the rebate is a smaller ₹12,500, applicable only up to ₹5 lakh of taxable income — a much lower ceiling, since the old regime's rebate structure hasn't been revised alongside the new regime's in recent budgets.

What Actually Carried Forward From Budget 2025

• New regime slabs and rates: unchanged
• Old regime slabs and rates: unchanged
• Section 87A rebate — ₹60,000 (new regime, up to ₹12 lakh) and ₹12,500 (old regime, up to ₹5 lakh): unchanged
• Standard deduction — ₹75,000 (new regime) and ₹50,000 (old regime): unchanged
• Surcharge structure — capped at 25% under the new regime (kicking in above ₹2 crore, with the highest slab of 25% applying above ₹5 crore) versus up to 37% under the old regime: unchanged

In short, if you filed your return for FY 2025-26 under either regime, the same slab numbers, the same rebate thresholds, and the same standard deduction figures apply again for FY 2026-27. The only planning decision that matters this year is the same one that mattered last year: whether your specific mix of deductions (80C, home loan interest, HRA) makes the old regime's lower slabs-with-deductions beat the new regime's higher slabs-with-no-deductions. Our breakeven analysis for salaried employees walks through exactly where that crossover point sits.

Bottom Line

Budget 2026 is a rare non-event for income tax slabs — no rate changes, no exemption limit changes, in either regime. The new regime remains the default and continues to make incomes up to ₹12.75 lakh (for salaried taxpayers) effectively tax-free after the standard deduction and 87A rebate, while the old regime stays relevant mainly for those with home loan interest, HRA, or heavy 80C investments that push their deduction value above the new regime's flat-rate advantage. Use the tables above with confidence for the entire FY 2026-27 filing cycle — nothing here is scheduled to change again until the next budget explicitly says so.