What are standard deduction and marginal relief for salaried employees after Budget 2026?

Finance Minister Nirmala Sitharaman announced no change in income tax slabs and rates under both old and new tax regimes in Budget 2026. Meaning, the slabs and rates announced in the previous year remain unchanged under both regimes.

In the lead-up to the Budget speech, the standard deduction was in focus for salaried taxpayers and pensioners. The standard deduction helps in reducing taxable salary income and can be claimed automatically, without the need for bills, investment proofs, or expense statements. However, in Budget 2026, no changes in standard deduction and marginal relief were announced.

Here are the details about both the standard deduction and marginal relief for salaried taxpayers:

What is standard deduction?

The standard deduction is a fixed amount that is reduced from a taxpayer’s salary income to calculate taxable income. Salaried individuals and pensioners can claim this deduction automatically, without submitting any bills, investments, or expense proofs.

Standard deduction under the old and new tax regimes

For FY 2025–26 (AY 2026–27), the standard deduction available is:

• Old Tax Regime: ₹50,000

• New Tax Regime: ₹75,000

This deduction is available to salaried employees and pensioners by default, irrespective of their income level.

What the tax department says on standard deduction

"Yes, a standard deduction of ₹ 75,000 is available to a tax payer in the new regime. Therefore, a salaried tax payer will not be required to pay any tax where his income before standard deduction is less than or equal to ₹ 12,75,000," the Income-tax department says.

What the tax department says on marginal deduction in new tax regime

"In the new regime, marginal relief is available to only resident individuals who have income marginally above ₹ 12lacs. For example, for a person having income of ₹12,10,000, in the absence of marginal relief, the tax, works out to be ₹ 61,500/- (5% of ₹ 4lacs + 10% of ₹4 lac + 15% of ₹ 10 thousand). However, due to marginal relief, the amount of tax to be actually paid is ₹10,000.".

Evolution of Standard Deduction in India

-Introduced in 1974 to simplify tax calculations for salaried taxpayers

-Reintroduced in Budget 2018 at ₹40,000

-Increased to ₹50,000 in Budget 2019

-Initially not available under the new tax regime

-Allowed under the new tax regime from Budget 2023

-Increased to ₹75,000 under the new tax regime in Budget 2024