Union Budget 2026: What are your tax slabs and how much goes to the Income Tax Department

Tax slabs 2026: As the income tax filing season for Assessment Year 2026–27 approaches, many taxpayers are unsure which tax slabs will apply, especially with the Union Budget 2026 presentation today. The key point to remember is that returns filed in AY 2026–27 relate to income earned in FY 2025–26, meaning the slabs announced in Budget 2025 will continue to govern tax calculations.

A common point of confusion is whether any new tax slab changes announced in Budget 2026 will affect returns filed for Assessment Year (AY) 2026–27. The short answer is no. Returns filed in AY 2026–27 relate to income earned during Financial Year (FY) 2025–26, and therefore, the tax slabs announced in the Union Budget 2025 will continue to apply. Any changes unveiled in Budget 2026 will only be relevant for income earned in FY 2026–27 and reflected in returns filed in 2027.

To bring clarity, here’s a breakdown of how salary incomes ranging from Rs 12 lakh to Rs 30 lakh will be taxed under the new tax regime for AY 2026–27, based on current slabs and rebates.

Tax on Rs 12 lakh salary

Under the new tax regime, a salaried individual earning ₹12 lakh will pay no income tax. This is due to the enhanced slab structure introduced in Budget 2025, along with the higher Section 87A rebate. After accounting for the standard deduction, the taxable income falls within the rebate threshold, reducing the final tax payable—including health and education cess—to zero.

This effectively means a large segment of middle-income salaried taxpayers remains completely tax-free under the new regime.

Tax on Rs 15 lakh salary: Around Rs 97,500

For an annual salary of Rs 15 lakh, the total tax payable under the new regime works out to Rs 97,500, including cess. Before cess, the tax liability is approximately Rs 93,750. The income is taxed across multiple slabs, with marginal rates kicking in only above the Rs 12 lakh mark.

Tax on Rs 20 lakh salary: About Rs 1.92 lakh

A salaried individual earning Rs 20 lakh will face a tax outgo of around Rs 1.92 lakh, including health and education cess. The base tax before cess stands at roughly Rs 1.85 lakh, with higher slab rates applying on income beyond ₹16 lakh.

Tax on Rs 25 lakh salary: Nearly Rs 3.2 lakh

For a salary of ₹25 lakh, the tax liability under the new regime rises to approximately ₹3.19 lakh, including cess. Income above Rs 24 lakh is taxed at the highest marginal rate, significantly increasing the overall tax outgo compared to lower income brackets.

Tax on Rs 30 lakh salary: Close to Rs 4.76 lakh

At the top end, a ₹30 lakh salary attracts a tax liability of about ₹4.75 lakh, including cess. The base tax before cess is roughly ₹4.57 lakh, with a substantial portion of income falling under the 30% slab.

Will Budget 2026 change these calculations?

No. Any changes to tax slabs announced in Budget 2026 will apply only to AY 2027–28, corresponding to income earned in FY 2026–27. For AY 2026–27, taxpayers must continue to use the slab rates and rebate structure notified in Budget 2025.

From April 1, 2026, the new Income-tax Act, 2025 will come into effect, formally renaming financial years as “tax years.” Even so, the underlying principle remains unchanged: tax rates announced in a Budget apply to income earned in the following year.

What to expect from Budget 2026

Most experts do not anticipate further slab rejigging in Budget 2026, particularly under the new tax regime, which has already been significantly liberalised. With the government consistently signalling its preference for simplicity and wider adoption of the new regime, major changes to the old tax regime also appear unlikely.

Instead, Budget 2026 is expected to focus on fine-tuning existing provisions, plugging anomalies, and offering targeted relief to specific taxpayer segments. For most salaried individuals, however, the core tax calculation framework is likely to remain stable, bringing predictability to tax planning for the year ahead.