Income Tax Slabs Budget 2026: Finance Minister Nirmala Sitharaman set a new record by presenting her ninth consecutive budget in Parliament today, February 1, 2026. After meeting with President Draupadi Murmu in the morning, when the Finance Minister opened her purse, the eyes of millions of salaried and middle-class taxpayers fell directly on the Income Tax Slabs.
This year, the government’s primary focus in the budget has been on simplifying procedures and providing technical relief to taxpayers, rather than making major changes to tax rates. While there have been no revolutionary changes to the slabs, an announcement regarding the ITR filing deadline has been a boon for those who often struggle to gather documents at the last minute.
New ITR Filing Deadline
The biggest and most reassuring announcement in Budget 2026 concerns the deadline for filing Income Tax Returns (ITRs). It’s often seen that many people are unable to file their returns on time due to technical glitches or incomplete paperwork.
The government has now proposed that taxpayers will be able to file their returns by March 31st with a nominal fee. This decision is a major relief for small taxpayers and the salaried class, who feared penalties and legal complications. By simplifying the process, the government has attempted to promote compliance.
Old Tax Regime
If you wish to avail of exemptions on your savings (such as Sections 80C, 80D, and HRA), the old tax regime is still available to you. There are no changes this year:
An annual income up to ₹2.5 lakh will be taxed at 5%. Income between ₹2.5 lakh and ₹5 lakh will be taxed at 20%. Income between ₹5 lakh and ₹10 lakh will be taxed at 20%. If your annual income is above ₹10 lakh, you will have to pay tax in the highest slab of 30%. This system is best suited for those who have investments like insurance, PF, or home loans.
New Tax Regime
The new tax regime is designed for those who want to pay taxes in a simple manner without any investments. This system has a higher number of slabs, which gradually increases the tax burden. Under the new system, income up to ₹4 lakh will be completely tax-free. Income between ₹4 lakh and ₹8 lakh will be taxed at 5%, and income between ₹8 lakh and ₹12 lakh will be taxed at 10%.
Further, there is a provision of 15% tax on income between ₹12 lakh and ₹16 lakh, 20% on income between ₹16 lakh and ₹20 lakh, and 25% on income between ₹20 lakh and ₹24 lakh. Those earning more than ₹24 lakh will have to pay 30% tax. This system is ideal for young people who want to enjoy their entire take-home salary without the hassle of investing.
Which system is better for you
Budget 2026 has made it clear that the government is now moving towards simplification. If you have a large portfolio of home loans, LIC, and other tax-saving schemes, the old system can save you a lot.
Conversely, if you have a high income but have not invested anywhere, the lower rates of the new system will benefit you. Not changing the slabs in the budget indicates that the government wants to keep the economy stable, but wants to give mental peace to the public by relaxing the procedures.