Standard deduction of Rs 75,000 for salaried taxpayers under the new tax regime FY 2025-26

For the financial year 2025-26 (assessment year 2026-27), a salaried individual or a pensioner assessed under the new tax regime of Section 115BAC deducts a flat Rs 75,000 from salary income before a single rupee of slab tax is worked out. The Finance Act 2024 raised that figure from Rs 50,000, and it has applied from assessment year 2025-26 onwards. Anyone who opts out and stays in the old regime continues to get Rs 50,000.

The Rs 25,000 difference in standard deduction between the two regimes is not a rounding detail, because Section 115BAC has been the default regime since FY 2023-24. A salaried person who files without making an express choice is assessed under the regime that carries the larger standard deduction, not the smaller one. Before you act on any figure in a forwarded message, put your own salary through the income tax calculator.

What the Section Says

A flat deduction, with nothing to prove

The standard deduction comes off salary income automatically. Unlike house rent allowance or a medical insurance premium, there is no receipt to preserve, no declaration to hand the payroll team and no ceiling pegged to what you actually spent. The full Rs 75,000 is allowed whether the annual salary is Rs 5,00,000 or Rs 50,00,000, and it reduces gross total income, so every rupee of it is sheltered at the taxpayer's own marginal slab rate rather than at some flat notional rate.

Pension taxable under the head "Salaries" is treated the same way. A pensioner assessed under Section 115BAC for FY 2025-26 claims the same Rs 75,000 that a serving employee claims, and a person who draws both a salary for part of the year and a pension for the rest still claims Rs 75,000 once, not twice.

Rs 75,000 or Rs 50,000: the regime decides

The regime choice therefore moves two numbers at once, and the old versus new regime comparison is the honest way to settle it. A taxpayer with Rs 3,00,000 of genuine Chapter VI-A deductions may still favour the old regime, despite the smaller standard deduction and the far lower tax rebate ceiling that the old regime carries; a taxpayer with no investments at all almost never does.

The slab ladder it feeds into

Those rates and cumulative figures are published by the Income Tax Department on its tax slabs page for AY 2026-27. Health and education cess of 4% is then charged on income tax plus surcharge. Surcharge itself begins at 10% above Rs 50,00,000, moves to 15% above Rs 1,00,00,000 and is capped at 25% in the new regime, including on income above Rs 5,00,00,000.

Because the deduction is taken off the top of the income, it is always relieved at the highest rate the taxpayer pays. At a taxable income sitting in the 20% band, Rs 75,000 of standard deduction is worth Rs 15,000 of tax plus Rs 600 of cess. The same Rs 75,000 inside the 5% band is worth Rs 3,750 plus Rs 150 of cess. The new regime calculator applies the ladder in the correct order so the marginal rate is not guessed at.

Worked Example

Case 1: a gross salary of Rs 12,75,000 pays nothing at all

This is the figure most salaried readers are actually hunting for, and it is arithmetic rather than a concession.

The Rs 75,000 deduction drags taxable income down to exactly Rs 12,00,000, which is the ceiling for the Section 87A rebate in the new regime. Tax on Rs 12,00,000 is Rs 60,000, and the rebate available is up to Rs 60,000, so the two cancel. Cess is 4% of an income tax of nil, which is nil. This result holds only where salary is the entire income; add Rs 40,000 of interest or capital gains and the Rs 12,00,000 ceiling is breached.

Case 2: a gross salary of Rs 18,00,000 saves Rs 15,600

Both columns sit in the 20% band that runs from Rs 16,00,001 to Rs 20,00,000, where tax is Rs 1,20,000 plus 20% of the excess over Rs 16,00,000. Without the deduction the excess is Rs 2,00,000, giving Rs 40,000 and a slab tax of Rs 1,60,000. With the deduction the excess falls to Rs 1,25,000, giving Rs 25,000 and a slab tax of Rs 1,45,000. The saving of Rs 15,600 is simply Rs 75,000 relieved at 20% and grossed up by the 4% cess.

Case 3: a gross salary of Rs 13,00,000 and the Section 87A threshold

Here the standard deduction brings taxable income to Rs 12,25,000. That figure sits above the Rs 12,00,000 ceiling, so the Section 87A relief of up to Rs 60,000 is not available in full, and the new regime's marginal relief above Rs 12,00,000 is what stops the tax bill jumping by more than the income did. Work the exact number through the marginal relief calculator rather than on the back of an envelope, because the relief is computed against the excess over Rs 12,00,000 and not against the slab tax.

Common Mistakes

Claiming Rs 75,000 while filing under the old regime. The old regime figure is still Rs 50,000. Claiming Rs 75,000 there overstates the deduction by Rs 25,000 and is one of the simplest mismatches for the return processing system to catch against the employer's own reporting.

Claiming it twice after changing jobs. A person who worked for two employers during FY 2025-26 will often hold two Form 16 documents, each of which may show Rs 75,000 deducted. The entitlement is Rs 75,000 for the person for the year, not Rs 75,000 for each Form 16. The second employer must be given the first employer's salary details so the deduction is not duplicated.

Reading "Rs 12,75,000 means nil tax" as a universal rule. It is true only where salary is the whole of the income. Savings bank interest, a fixed deposit, dividend or a capital gain is added before the Rs 12,00,000 test is applied, and the rebate then falls away.

Claiming it against business or professional income. The deduction attaches to income taxable under the head "Salaries", which includes pension. A consultant billing professional fees has no standard deduction, whichever regime is chosen.

Working from a superseded Section 87A limit. For FY 2025-26 the Section 87A ceiling in the new regime is Rs 60,000 against taxable income up to Rs 12,00,000. A return prepared from an out-of-date ready reckoner understates the relief available and overstates the tax due.

Ignoring how the employer is already deducting. Because Section 115BAC is the default, payroll computes monthly tax deducted at source on new regime rates with the Rs 75,000 standard deduction unless the employee files a declaration choosing the old regime. Reconcile the monthly figure using the TDS calculator early in the year, not in March.

FAQ

Is the Rs 75,000 standard deduction available in both tax regimes?

No. It is Rs 75,000 under the new regime of Section 115BAC and Rs 50,000 under the old regime for FY 2025-26. The higher figure was introduced by the Finance Act 2024 with effect from assessment year 2025-26.

Do I have to submit proof to claim it?

No. It is a flat deduction with no expenditure requirement, no receipts and no employer declaration. It is allowed in full at Rs 75,000 regardless of the size of the salary.

Can a pensioner claim it?

Yes, where the pension is taxable under the head "Salaries". The amount is the same Rs 75,000 under the new regime for FY 2025-26.

At what salary does the new regime produce nil tax?

A gross salary of Rs 12,75,000 reduces to Rs 12,00,000 of taxable income after the Rs 75,000 deduction, attracts slab tax of Rs 60,000 and is fully extinguished by the Section 87A rebate of up to Rs 60,000. This assumes salary is the only income for FY 2025-26.

What happens just above Rs 12,00,000 of taxable income?

The Section 87A rebate ceiling of Rs 60,000 applies only up to Rs 12,00,000 of taxable income in the new regime. Above that threshold, marginal relief operates so that the additional tax does not exceed the additional income.

Does the deduction reduce my surcharge as well?

Yes, indirectly. Surcharge is charged on income tax, which is computed after the Rs 75,000 has been removed, and cess of 4% then applies to income tax plus surcharge. The new regime surcharge is capped at 25% against 37% in the old regime.

Where do I check the official position before filing?

The Income Tax Department publishes the applicable slabs, surcharge rates and return selection guidance on its own portal, including the ITR-1 Sahaj filing guide. File and e-verify only through incometax.gov.in; the department does not ask for tax payments through links sent by message.