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Income Tax for Salaried Employees: Tax Slabs, Deductions & ITR Filing – 2026
Author
Shoonya Team
For most working professionals in India, salary income forms the largest part of their earnings, and it is also one of the most commonly taxed sources under the Income Tax Act.
For FY 2025–26 (AY 2026–27), income tax for salaried employees continues to follow the existing tax structure, as the latest Union Budget 2026 did not introduce any changes to the slab rates.
Under the revised new-regime structure announced in the Union Budget 2025-26, slab rates range from nil to 30%, and salaried taxpayers can also benefit from a standard deduction of ₹ 75,000. This means eligible salaried taxpayers can have nil tax up to ₹12.75 lakh under the new regime, subject to the rebate conditions.
What Is Considered Salary Income?
Under the Income Tax Act, salary income includes all payments received by an employee from an employer in exchange for services provided. These payments are taxable under the head “Income from Salary.”
Salary can include several other components and benefits provided by the employer:
1. Basic Salary: This is the fixed component of an employee’s salary and forms the base for calculating many other allowances and benefits.
2. Dearness Allowance (DA): It is provided to employees to help offset the impact of inflation. It is usually taxable as part of salary income.
3. House Rent Allowance (HRA): It is paid to employees who live in rented accommodation. Certain exemptions may be available under the old tax regime, subject to specific conditions.
4. Bonuses and Incentives: Performance bonuses, commissions, and incentives received from the employer are also treated as part of salary income and are generally taxable.
5. Leave Encashment: Payments received for unused leave may be partially or fully taxable depending on the circumstances and applicable rules.
6. Pension: Pension received from a former employer is also treated as salary income under the Income Tax Act.
Income Tax Slabs Applicable to Salaried Employees FY 2025–26 (AY 2026-27): Old Tax Regime vs. New Tax Regime
For FY 2025–26 (AY 2026–27), salaried individuals can choose between the old and new tax regimes, depending on which results in lower tax liability.
New Tax Regime Slabs (FY 2025–26)
| Taxable Income | Tax Rate |
| Up to ₹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% |
Under the new regime, salaried taxpayers can also claim a standard deduction of ₹ 75,000. PIB has stated that this makes income up to ₹12.75 lakh effectively tax-free for salaried taxpayers, subject to the rebate rules and excluding special-rate income such as capital gains.
Old Tax Slabs
In the old tax regime, the basic exemption limit depends on your age:
| Taxable Income | Tax Rate |
| Up to ₹2,50,000 | Nil |
| ₹2,50,001 – ₹5,00,000 | 5% |
| ₹5,00,001 – ₹10,00,000 | 20% |
| Above ₹10,00,000 | 30% |
You must choose between the two regimes when you file your Income Tax Return (ITR).
1. Old Tax Regime vs New Tax Regime:
- Old Tax Regime: Allows you to claim various tax deductions and exemptions.
- New Tax Regime: This does not allow these deductions but offers simpler tax slabs.
2. How to Switch:
- If you’re a non-business taxpayer, you can choose your tax regime each year when filing your tax return.
- If you have business income, the new tax regime is the default, but you can opt for the old tax regime by filling out a specific form (Form 10-IEA).
Tax Slabs for Salaried Employees Below 60 Years
| Income Range | Old Tax Regime | New Tax Regime |
| Up to ₹2,50,000 | No Tax | No Tax (Up to ₹3,00,000) |
| ₹2,50,001 – ₹5,00,000 | 5% | 5% above ₹3,00,000 |
| ₹5,00,001 – ₹7,00,000 | 20% | 5% above ₹3,00,000 (Rebate available) |
| ₹7,00,001 – ₹10,00,000 | 20% | 10% above ₹7,00,000 |
| ₹10,00,001 – ₹15,00,000 | 30% | 15% above ₹10,00,000 |
| Above ₹15,00,000 | 30% | 30% |
- Under the new regime for FY 2025–26, the rebate framework can make tax payable nil up to ₹12 lakh for eligible resident individuals.
- For salaried taxpayers, the nil-tax threshold is ₹12.75 lakh due to the ₹75,000 standard deduction.
- A surcharge applies to income above ₹50 lakh.
Tax Slabs for Salaried Employees- Senior Citizens (60-79 Years)
| Income Range | Old Tax Regime | New Tax Regime |
| Up to ₹3,00,000 | No Tax | No Tax |
| ₹3,00,001 – ₹5,00,000 | 5% | 5% above ₹3,00,000 |
| ₹5,00,001 – ₹7,00,000 | 20% | 5% above ₹3,00,000 (Rebate available) |
| ₹7,00,001 – ₹10,00,000 | 20% | 10% above ₹7,00,000 |
| ₹10,00,001 – ₹15,00,000 | 30% | 15% above ₹10,00,000 |
| Above ₹15,00,000 | 30% | 30% |
Tax Slabs for Salaried Employees- Super Senior Citizens (80+ Years)
| Income Range | Old Tax Regime | New Tax Regime |
| Up to ₹5,00,000 | No Tax | No Tax (Up to ₹3,00,000) |
| ₹5,00,001 – ₹7,00,000 | 20% | 5% above ₹3,00,000 (Rebate available) |
| ₹7,00,001 – ₹10,00,000 | 20% | 10% above ₹7,00,000 |
| ₹10,00,001 – ₹15,00,000 | 30% | 15% above ₹10,00,000 |
| Above ₹15,00,000 | 30% | 30% |
What are the Available Income Tax Deductions for Salaried Employees?
If you are a taxpayer in India, you can claim tax deductions on certain investments, payments, and incomes. These deductions help reduce your taxable income and lower the overall tax liability.
However, the deductions available depend on whether you choose the new tax regime or the old tax regime while filing your income tax return.
Income Tax Deductions for Salaried Employees under the New Tax Regime (Section 115BAC)
Under the new tax regime, most deductions and exemptions are not available. However, a few specific deductions are still allowed.
1. Standard Deduction
Salaried employees can claim a standard deduction of ₹75,000 under the new regime for FY 2025–26. This deduction is one of the reasons why salaried taxpayers can have nil tax up to ₹12.75 lakh under the new regime, subject to conditions.
2. Employer Contribution to NPS (Section 80CCD(2))
If your employer contributes to the National Pension System (NPS) on your behalf, you can claim a deduction for that amount.
- 14% of the salary for Central and State Government employees
- 10% of the salary for private-sector employees
3. Home Loan Interest for Let-Out Property (Section 24(b))
If you have taken a home loan for a rented property, you can claim a deduction on the entire interest amount paid on the loan.
However, under the new tax regime, losses from house property cannot be set off against other income, such as salary, though they can be carried forward to future years.
4. Agnipath Scheme Deduction (Section 80CCH)
Individuals enrolled under the Agnipath Scheme can claim deductions on contributions made to the Agniveer Corpus Fund.
Both the individual contribution and the Central Government’s contribution to the fund are eligible for deduction.
Income Tax Deductions for Salaried Employees under the Old Tax Regime
The old tax regime allows taxpayers to claim several deductions and exemptions under Chapter VI-A of the Income Tax Act, thereby significantly reducing taxable income.
Home Loan Interest (Section 24(b))
- Deduction up to ₹2,00,000 for self-occupied property (if loan taken after April 1, 1999)
- Deduction up to ₹30,000 for loans taken before April 1, 1999
Deductions under Chapter VI-A
Section 80C, 80CCC, 80CCD(1): Deduction up to ₹1,50,000 for investments such as:
- Life Insurance Premium
- Public Provident Fund (PPF)
- National Savings Certificate (NSC)
- Equity Linked Savings Scheme (ELSS)
- Tuition fees for children
- Principal repayment of the home loan
Section 80CCD(1B): Additional deduction up to ₹50,000 for contributions to the National Pension System (NPS).
Section 80CCD(2): Employer’s contribution to NPS is also deductible.
Section 80CCH: Deduction available for contributions to the Agniveer Corpus Fund under the Agnipath Scheme.
Health Insurance (Section 80D): Deduction available for health insurance premiums.
- Up to ₹25,000 for self, spouse, and children
- Up to ₹50,000 if parents are senior citizens
Preventive health check-ups are included within the deduction limit.
Medical Expenses for Disability & Diseases
- Section 80DD: ₹ 75,000 deduction for medical expenses of disabled dependents (₹ 1,25,000 for severe disability).
- Section 80DDB: ₹ 40,000 deduction for treatment of specified diseases (₹ 1,00,000 for senior citizens).
Education Loan (Section 80E): Deduction is allowed on interest paid on education loans taken for higher education for self, spouse, or children.
Additional Home Loan Interest Deductions
- Section 80EE: ₹ 50,000 deduction on home loan interest (for loans sanctioned between FY 2016-17).
- Section 80EEA: ₹ 1,50,000 deduction for first-time homebuyers (for loans sanctioned between FY 2019-22).
Electric Vehicle Loan (Section 80EEB): Deduction up to ₹1,50,000 on interest paid on loans taken to purchase electric vehicles.
Donations (Section 80G)
- Taxpayers can claim 50% or 100% deduction on donations made to eligible charitable institutions and funds.
- Cash donations above ₹2,000 are not eligible for deduction.
Rent Paid (Section 80GG)
For individuals without HRA, deduction is the least of the following:
- Rent paid – 10% of total income
- ₹ 5,000 per month
- 25% of total income
Form 10BA must be submitted to claim this deduction.
Interest Income Deductions
- Section 80TTA: ₹ 10,000 deduction on savings bank interest (for non-senior citizens).
- Section 80TTB: ₹ 50,000 deduction on deposit interest (for senior citizens).
Political Party Donations (Section 80GGC): 100% deduction for donations made to political parties or electoral trusts.
Disability Benefits (Section 80U)
- ₹75,000 deduction for disabled taxpayers.
- ₹1,25,000 deduction for severe disability (80% or more).
Form 10-IA is recommended for filing.
ITR Forms for Salaried Individuals for AY 2026-27
| ITR Form | Who can use it? | Key conditions |
| ITR-1 (Sahaj) | Resident individual | Total income up to ₹50 lakh from salary/pension, one house property, and other sources, with agricultural income up to ₹5,000 |
| ITR-2 | Individual or HUF | No business or professional income and not eligible for ITR-1 |
| ITR-3 | Individual or HUF | Has business or professional income |
| ITR-4 (Sugam) | Resident individual, HUF, or firm other than LLP | Presumptive business/professional income and total income up to ₹50 lakh |
Other ITR Forms for Salaried Persons
| Form | Purpose |
| Form 12BB | Submitted by the employee to the employer for tax-saving declarations and evidence used in TDS working |
| Form 16 | Salary TDS certificate issued by the employer |
| Form 131 | TDS certificate for non-salary income under the 2026 forms framework; corresponds to old Form 16A |
| Form 168 | Annual information statement structure under the 2026 framework |
| Form 44 | Foreign tax credit statement under the 2026 framework; corresponds to old Form 67 |
| Form 121 | Declaration for non-deduction of TDS under the 2026 framework; corresponds to old Forms 15G / 15H |
| Form 10E | Relief claim for salary received in arrears or advance under section 89(1) |
You can download these ITR forms for salaried individuals from the official Income Tax e-filing portal https://www.incometax.gov.in.
Before you begin filing your ITR, make sure you have all the necessary documents and details ready.
How to File ITR for Salaried Employees
Here’s a simple step-by-step guide on how to file an income tax return online for salaried employees:
- Register on the e-Filing Portal: You need to visit the Income Tax Department’s e-filing portal and create an account. All you need is your PAN, email, and mobile number.
- Log In: Once you’re registered, log in with your credentials, User ID, password, and captcha code.
- Choose the Right ITR Form for a Salaried Person: The form you need depends on your income and tax situation.
- ITR-1 (Sahaj): For salaried individuals or those with one house property, agricultural income (up to ₹5,000), and income from other sources like interest.
- ITR-4 (Sugam): For those with business income under presumptive taxation schemes (sections 44AD, 44ADA, or 44AE).
- Pre-fill Data: The portal can help by prefilling details such as your salary, TDS, and interest income from Form 26AS. Make sure to review and update this information if needed.
- Fill in Any Extra Details: If you have deductions for salaried employees class under sections like 80C (e.g., PPF, life insurance), 80D (health insurance), or others, make sure to add them.
- Review and Validate: Before submitting your ITRs, take a moment to double-check everything. Ensure your income and deduction details are correct.
- Calculate and Pay Tax: Once all details are filled, the portal will automatically calculate your tax. If you owe any, pay it online using net banking or other available options.
- Submit Your Return: After checking everything, submit your return. Don’t forget to e-verify it through Aadhaar OTP, net banking, or a digital signature.
- Get Your Acknowledgement: Once you submit, the portal will generate an ITR-V acknowledgement. You need to e-verify it to complete the process.
Common Mistakes to Avoid While Filing ITR for Salaried Employees
Here are some common mistakes people make when filing their ITR online, and how you can avoid them!
- Using outdated slab or rebate figures: For FY 2025–26, the new-regime slab structure and salaried-taxpayer relief changed, including the ₹75,000 standard deduction and the nil-tax position up to ₹12.75 lakh for eligible salaried taxpayers.
- Choosing the wrong ITR form: Most salaried taxpayers use ITR-1 or ITR-2, depending on income sources.
- Not reconciling salary and TDS details: Salary income and tax deducted should be checked carefully against Form 16 and the tax statement framework.
- Claiming deductions under the wrong regime: Many deductions available in the old regime are not available in the new regime.
- Missing e-verification: Filing is incomplete until the return is properly verified.
Tax Saving Options for Salaried Employees and Important Filing Tips
- Don’t wait until the last minute to gather documents like Form 16, Form 26AS, and any proof for deductions. The more prepared you are, the smoother the process will be.
- Always double-check everything, especially your income, deductions, and bank details. It’s easy to make a small mistake, and you don’t want that.
- E-verifying your return is quick and easy. Do it right after you submit to complete the process faster.
- The earlier you file, the less stressful it is. Plus, you’ll have more time to correct any mistakes before the deadline.
Assisted Income Tax Return (ITR) Filing
The Income Tax Department has introduced new features and services on its e-filing portal to make ITR and statutory form filing more user-friendly. The portal includes a Wizard to guide users in selecting the correct ITR, pre-filled ITRs, and a new offline utility to ease the compliance burden.
Additionally, if you need more assistance, you can add a Chartered Accountant (CA), e-Return Intermediary (ERI), or any authorised representative to help with ITR filing or related services.
Who Can Assist You?
1. Chartered Accountant (CA)
To add a CA:
- Add and assign a CA via the e-filing portal (using the ‘My CA’ service).
- You can also remove or withdraw a CA through the same portal.
2. e-Return Intermediary (ERI)
e-Return Intermediaries (ERIs) are authorised intermediaries that help file income tax returns (ITRs) and provide other services to taxpayers. There are three types of ERIs:
- Type 1 ERIs: Use the Income Tax Department’s utilities for filing ITRs.
- Type 2 ERIs: Use their own software to file returns through the e-filing portal.
- Type 3 ERIs: Develop offline utilities to file ITRs.
To add an ERI:
- Add an ERI via the ee-filingportal (using the ‘My ERI’ service).
- You can activate, deactivate, or remove an ERI.
3. Authorised Representative
An Authorised Representative acts on your behalf when you’re unable to attend to your tax-related matters, such as when you’re abroad or unavailable.
To add an Authorised Representative:
- Add the representative via the e-filing portal using the ‘Authorise/ Register as Representative’ service.
If you’re unable to act for other reasons (e.g., estate management, company liquidation), a designated person can register to act on your behalf.
Conclusion
For FY 2025–26, salaried employees should carefully compare the old and new tax regimes rather than assume one is always better. The revised new-regime slab structure, the ₹75,000 standard deduction, and the availability of deductions under the old regime can materially change the final tax outgo.
Choosing the right regime after comparing actual tax liability is the most practical approach.
ITR for Salaried Person: FAQs
Salaried employees can claim deductions like HRA, standard deduction, 80C, 80D, and home loan interest.
You can download Form 16 from your employer’s portal or request it directly from the HR/payroll department.
Salaried employees can file ITR through the Income Tax e-Filing portal by choosing the correct ITR form, checking pre-filled salary and TDS details, adding eligible deductions, and completing e-verification.
Salaried individuals typically file ITR-1 (Sahaj) or ITR-2 if they have capital gains or multiple income sources.
They can save tax by investing in 80C instruments, claiming HRA, NPS contributions, home loans, and medical insurance.
You can use an online income tax calculator by entering salary, deductions, and exemptions to estimate the payable tax.
Filing ITR helps in tax refunds, availing loans, visa applications, and maintaining financial records.
Under the new regime for FY 2025–26, salaried taxpayers can claim a ₹75,000 standard deduction. PIB also stated that this helps make income up to ₹12.75 lakh effectively tax-free for eligible salaried taxpayers under the new regime.
Source: https://www.incometax.gov.in
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