New Income Tax Slabs and Rates 2026 Live News Updates: No Change in Income Tax Slabs and Rates

New Delhi, February 1: As Finance Minister Nirmala Sitharaman prepares to present the Union Budget 2026-27 today, February 1, the salaried class and middle-income earners are looking for measures to offset inflationary pressures. This budget is particularly significant as it serves as the final roadmap before the new Income Tax Act, 2025, officially takes effect on April 1, 2026. Catch live news updates on the new Income Tax slabs and rates 2026 here.

In her previous budget presentation on February 1, 2025, Finance Minister Nirmala Sitharaman introduced a landmark reform for middle-class taxpayers. She announced that under the New Tax Regime, individuals with an annual income of up to INR 12 lakh would pay zero income tax.

This was achieved by significantly enhancing the tax rebate under Section 87A to INR 60,000. For salaried individuals, the effective tax-free threshold rose even higher to INR 12.75 lakh, factoring in the INR 75,000 standard deduction. This move aimed to boost household consumption by leaving more disposable income in the hands of nearly 35 million taxpayers. Income Tax Slabs and Rates: Know New vs Old Regime Ahead of Budget 2026.

Income Tax Key Expectation: Standard Deduction Hike

The most widely anticipated relief for salaried employees is a potential increase in the Standard Deduction. Currently set at INR 75,000 under the New Tax Regime (following a hike in 2024-25) and INR 50,000 in the Old Regime, there is a strong demand to raise this limit to INR 1,00,000.

Industry analysts suggest that such a move would provide more disposable income to the middle class without requiring a complete overhaul of the tax slabs, which were already significantly revised in the previous fiscal year. Budget 2026: Live News Updates on Nirmala Sitharaman Speech.

Potential Income Tax Slab Adjustments and 87A Rebate

While major changes to the tax brackets are considered unlikely, there is speculation regarding the 30% tax slab. Currently, the highest tax rate kicks in at an income of INR 24 lakh under the New Regime. Taxpayers have urged the government to move this threshold to INR 30 lakh or higher.

Additionally, experts are watching for updates to Section 87A. Under current rules, an individual earning up to INR 12 lakh pays zero tax due to a rebate of INR 60,000. There are hopes that this "zero-tax" threshold could be extended further or that the rebate could be adjusted to prevent a "cliff effect" for those earning just above the limit.

Focus on Savings and Housing

Beyond slabs, the "wishlist" for Budget 2026 includes:

• Section 80C: A long-standing demand to increase the limit from INR 1.5 lakh to INR 2.5 lakh or INR 3 lakh under the Old Regime.
• National Pension System (NPS): Hopes for an additional INR 50,000 deduction to be explicitly allowed under the New Regime to boost retirement savings.
• Home Loans: Real estate experts are looking for a hike in the interest deduction limit on self-occupied property (Section 24b) from the current INR 2 lakh to INR 3 lakh or more.

Current Income Tax Slabs (FY 2025-26/AY 2026-27)

Before any potential changes are announced today, here is the current tax structure that remains the baseline for today's speech:

Under the New Regime, a full rebate is available for income up to INR 12 lakh, resulting in zero tax. With the standard deduction of INR 75,000, the effective tax-free limit for salaried individuals is INR 12.75 lakh.

Transitioning to the New Income Tax Act

A major technical highlight of today's speech will be the transition provisions for the Income Tax Act, 2025. The government aims to simplify the code by reducing the number of sections and word count, making compliance more "intuitive." Taxpayers are hoping for clarity on how existing exemptions and litigations will be handled during this massive legislative shift.

(The above story first appeared on LatestLY on Feb 01, 2026 11:02 AM IST. For more news and updates on politics, world, sports, entertainment and lifestyle, log on to our website latestly.com).