New Tax Slabs 2026: Zero Tax Up to ₹12 Lakh for Many Taxpayers

Middle Class Gets Significant Tax Relief as Budget 2026 Maintains Simple Tax Slabs

New Delhi, February 14:

In the Union Budget 2026 presented on Friday, the government provided meaningful relief to middle-income taxpayers by retaining a simplified progressive tax structure and enabling higher take-home income for salaried individuals and families across the country.

The latest tax slabs under the New Tax Regime for Financial Year 2026-27 (Assessment Year 2027-28) aim to reduce the tax burden on the middle class while keeping the system straightforward and transparent.

Key Income Tax Slabs for 2026-27

Under the re-affirmed tax framework, the following income tax rates apply for individual taxpayers opting for the new tax regime:

• ₹0 – ₹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%

In addition, a rebate under Section 87A ensures that resident individuals with taxable income up to ₹12 lakh effectively pay zero income tax, further lightening the burden on middle-class households.

Increased Disposable Income for Middle Class

The retention of these tax slabs combined with a standard deduction of up to ₹75,000 for salaried and pensioner taxpayers is expected to put more money back into the hands of millions of working families.

Financial analysts believe that these measures will enhance purchasing power, helping households meet essential expenses, invest in education and health, and even boost spending in key sectors such as housing and retail.

“This year’s Budget reinforces confidence among the middle class, who will benefit from increased savings and improved financial flexibility,” said a tax expert.

Positive Economic Outlook

Industry leaders welcomed the approach, noting that higher disposable income could stimulate demand in the broader economy, support job creation, and strengthen confidence in the post-pandemic recovery phase.

However, some financial consultants advise taxpayers to evaluate both the new and old tax regimes to determine the best option based on individual financial goals and deductions.

Government’s Perspective

Officials from the Finance Ministry said the tax relief aligns with the government’s commitment to support the middle class and create a growth-oriented economic environment.

They emphasized that continued focus on tax simplification and citizen-friendly policies are central to the administration’s vision of inclusive development.