If you are a salaried employee in India, you are sitting on one of the most valuable and effortless tax-saving tools available to you — the Standard Deduction. You do not need to submit any bills. You do not need to maintain any receipts. You do not need to prove any expense. Yet, every year, this single deduction puts thousands of rupees back into your pocket simply by reducing your taxable income from salary.

For FY 2025-26 (Assessment Year 2026-27), the Standard Deduction has been enhanced to ₹75,000 under the New Tax Regime — a significant jump from the earlier ₹50,000. This change, announced in the Union Budget 2024, directly benefits crores of salaried taxpayers across India.

In this complete guide, we cover everything you need to know about the Standard Deduction in 2026 — what it is, how much it is, who qualifies, how to claim it, how it works under both the Old and New Tax Regimes, real calculation examples, and expert tips to maximise your tax savings.

What is Standard Deduction?

Standard Deduction is a flat deduction allowed from your gross salary income before calculating your taxable income. It is a fixed amount that you can deduct from your salary without having to provide any proof, receipts, or documentation. The government allows this deduction to account for general work-related expenses that salaried employees incur in the course of their employment.

In simple terms:

Taxable Salary = Gross Salary − Standard Deduction

The Standard Deduction was originally introduced in India decades ago, then abolished in 2004-05 when separate deductions for transport allowance and medical reimbursement were introduced, and finally reintroduced in Budget 2018 as a consolidated relief for salaried taxpayers.

History of Standard Deduction in India

Standard Deduction for FY 2025-26 (AY 2026-27) — The 2026 Update

For the current Financial Year 2025-26, which corresponds to Assessment Year 2026-27 (the year you file your ITR in 2026), the Standard Deduction is as follows:

Who is Eligible for Standard Deduction in 2026?

Eligible Categories

• Salaried Employees: All individuals receiving salary income from one or more employers — private sector, public sector, or government employees.
• Pensioners: Individuals receiving pension from a former employer are eligible. Note: Family pension has a different and lower deduction.
• Multiple Job Holders: If you have changed jobs during the year and received salary from more than one employer, you are still eligible — but the total Standard Deduction claimed across all employers cannot exceed ₹75,000 (New Regime) or ₹50,000 (Old Regime).
• Part-Time Employees: Eligible if their income is classified as ‘Income from Salary’ and TDS has been deducted accordingly.

Not Eligible for Standard Deduction

• Self-Employed / Freelancers: Income earned as a freelancer or consultant is classified as ‘Income from Business and Profession’ — Standard Deduction under Section 16(ia) does not apply.
• Family Pensioners: Family pension is taxed under ‘Income from Other Sources’ — different deduction rules apply (₹25,000 or 1/3 of pension, whichever is lower, under Section 57(iia)).
• NRIs with no Indian salary: Non-Resident Indians without salary income from India are not eligible.

Standard Deduction: New Tax Regime vs Old Tax Regime — Comparison

How to Claim Standard Deduction — Step by Step

The best part about Standard Deduction is that it requires absolutely zero effort to claim. Here is exactly how it works:

For Salaried Employees (via Employer — TDS)

1. Your employer deducts Standard Deduction from your gross salary while computing TDS (Tax Deducted at Source) each month.
2. You do not need to submit any declaration, bills, or proof to your employer for Standard Deduction.
3. At year-end, your employer includes the Standard Deduction in your Form 16 (Part B) under ‘Deductions u/s 16’.
4. When filing your ITR (Income Tax Return), the Standard Deduction is pre-filled in the ITR form based on Form 16 / AIS / TIS data.
5. Verify the pre-filled amount and confirm — no further action required.

For Pensioners

6. If pension is paid by a bank or financial institution (as in government pensions), the pension-paying bank deducts TDS after applying Standard Deduction.
7. Confirm with your bank that Standard Deduction has been correctly applied in TDS calculation.
8. Verify the same in Form 26AS before filing ITR.

Where to Check in Your ITR

In your ITR (Income Tax Return), Standard Deduction appears under:

• ITR-1 (Sahaj) / ITR-2: Schedule S (Income from Salary) > Deductions u/s 16 > Standard Deduction
• The amount should match your Form 16 Part B
• It is automatically deducted from Gross Salary to arrive at Net Salary (Taxable)

Standard Deduction Calculation — Real Examples for FY 2025-26

Example 1: Salaried Employee — New Tax Regime — ₹10 Lakh CTC

Example 2: Salaried Employee — New Tax Regime — ₹7 Lakh Salary

Example 3: Comparison — New Regime vs Old Regime on ₹12 Lakh Salary

In this example, the Old Regime saves more tax due to substantial deductions (80C + 80D + HRA). However, for employees without significant investments, the New Regime with ₹75,000 Standard Deduction would be more beneficial.

Standard Deduction for Pensioners in 2026

Pensioners — individuals receiving pension from their former employer — are eligible for Standard Deduction on the same terms as salaried employees:

• New Tax Regime: ₹75,000 Standard Deduction on pension income
• Old Tax Regime: ₹50,000 Standard Deduction on pension income
• No documentation or proof required
• Applicable to both government and private sector pensioners

Family Pension — Different Rules Apply

Family pension (pension received by a family member after the death of an employee/pensioner) is NOT classified under ‘Income from Salary’. It falls under ‘Income from Other Sources’. Therefore, the ₹75,000 / ₹50,000 Standard Deduction does NOT apply. Instead, Section 57(iia) provides:

Standard Deduction with Multiple Employers

Many salaried professionals change jobs or work with multiple employers during the same financial year. Here is how Standard Deduction works in such cases:

Job Change During the Year

• Employer 1 (previous job): Employer 1 would have applied Standard Deduction while calculating TDS. This will reflect in Form 16 from Employer 1.
• Employer 2 (current job): Employer 2 also applies Standard Deduction independently.
• At ITR filing time: You can only claim Standard Deduction ONCE — the total across all employers is capped at ₹75,000 (New Regime) or ₹50,000 (Old Regime). If both employers deducted less than the limit in aggregate, you can claim the full limit in your ITR.

Standard Deduction in Form 16 — Where to Find It

Form 16 is the TDS certificate issued by your employer. Standard Deduction appears in Form 16 Part B — the detailed salary breakup. Here is where to look:

• Section: ‘Deductions under Section 16’
• Line item: ‘Standard Deduction u/s 16(ia)’ — showing ₹75,000 or ₹50,000 as applicable
• Also appears in: ‘Statement showing your income from salary’ in Part B
• Cross-check: Ensure the amount in Form 16 matches what you claim in your ITR
• AIS/TIS: The Annual Information Statement (AIS) also reflects salary and deductions — verify consistency

How Much Tax Does Standard Deduction Save in 2026?

The actual tax saving depends on your tax slab. Here is the tax saved due to ₹75,000 Standard Deduction (New Regime) versus zero deduction:

Complete Picture — All Deductions Under Section 16

Standard Deduction is one of three deductions available under Section 16 of the Income Tax Act. For maximum tax saving, understand all three:

Standard Deduction in Union Budget 2025 — What Changed?

The Union Budget 2025 (presented in February 2025, effective FY 2025-26) brought significant changes to the income tax structure, particularly benefiting salaried taxpayers under the New Tax Regime:

• Standard Deduction Retained at ₹75,000: No further increase in Standard Deduction was announced. It continues at ₹75,000 under the New Tax Regime.
• New Tax Slabs (FY 2025-26): The New Tax Regime slabs were revised — Income up to ₹4 Lakh: Nil, ₹4L–₹8L: 5%, ₹8L–₹12L: 10%, ₹12L–₹16L: 15%, ₹16L–₹20L: 20%, ₹20L–₹24L: 25%, Above ₹24L: 30%.
• Section 87A Rebate Enhanced: The rebate under Section 87A was enhanced — no tax payable for income up to ₹12 Lakh (after Standard Deduction and other deductions) under the New Tax Regime. For salaried employees, this effectively means zero tax up to approximately ₹12.75 Lakh gross salary.
• Nil Tax Threshold for Salaried: With the ₹75,000 Standard Deduction + ₹12 Lakh rebate limit, salaried employees with gross income up to ₹12,75,000 effectively pay zero income tax under the New Regime.

Common Mistakes Salaried Employees Make Regarding Standard Deduction

• Not switching to New Regime despite lower investments: Many employees stick to the Old Regime by habit without comparing. At ₹75,000 Standard Deduction + new slabs, the New Regime now benefits most employees with moderate investments.
• Claiming Standard Deduction twice with two employers: If you change jobs, both employers may apply Standard Deduction. The combined claim cannot exceed the limit. Disclose previous employer salary via Form 12B.
• Confusing Standard Deduction with 80C deductions: Standard Deduction is separate from and in addition to Section 80C deductions (under Old Regime). They work independently.
• Pensioners missing their Standard Deduction: Many retired individuals are unaware that pension income qualifies for the same Standard Deduction as salary income.
• Not verifying Form 16: Always check that your employer has correctly applied ₹75,000 (New) or ₹50,000 (Old) as Standard Deduction in Form 16. Errors in Form 16 need to be corrected before filing ITR.
• Assuming freelancers can claim it: Standard Deduction under Section 16(ia) is ONLY for salary income. Freelancers and consultants cannot claim this — their income is taxed under ‘Business and Profession’.
• Forgetting Professional Tax deduction: Section 16(iii) allows deduction of Professional Tax actually paid. Do not miss this additional ₹2,400 (approx.) deduction available alongside Standard Deduction.

Frequently Asked Questions — Standard Deduction 2026

Q1: Is Standard Deduction available in both Old and New Tax Regimes in 2026?

Yes. Standard Deduction is available in both regimes. Under the New Tax Regime, it is ₹75,000. Under the Old Tax Regime, it is ₹50,000. Both are applicable from FY 2024-25 onwards and continue in FY 2025-26 (AY 2026-27).

Q2: Do I need to submit any documents to claim Standard Deduction?

No. Standard Deduction under Section 16(ia) requires absolutely no documentation. You do not need to submit bills, receipts, or any proof. Your employer automatically applies it while calculating TDS, and it appears in Form 16.

Q3: Can I claim Standard Deduction if I work from home?

Yes. Standard Deduction is not conditional on where you work. Whether you work from office, home, or hybrid, as long as your income is classified as ‘Income from Salary’, you are eligible for Standard Deduction.

Q4: What is the Standard Deduction for government employees in 2026?

Government employees are eligible for Standard Deduction of ₹75,000 (New Regime) or ₹50,000 (Old Regime) — the same as private sector employees. Additionally, government employees in the Old Regime can claim Entertainment Allowance under Section 16(ii).

Q5: Is Standard Deduction available for part-time salary income?

Yes, as long as your part-time income is classified and taxed as ‘Income from Salary’ and your employer deducts TDS. If you are paid as a freelancer or consultant (professional fees), it is not eligible.

Q6: Can a retired government employee (pension + salary from new job) claim Standard Deduction twice?

Technically, pension from a former employer and salary from a new employer are both ‘Income from Salary’. However, the aggregate Standard Deduction across all salary/pension sources is capped at the regime limit (₹75,000 New / ₹50,000 Old) per financial year.

Q7: My employer has deducted only ₹50,000 as Standard Deduction. Can I claim ₹75,000 in ITR under the New Regime?

Yes. If you are opting for the New Tax Regime and your employer has applied only ₹50,000, you can claim the full ₹75,000 Standard Deduction in your ITR. The difference will reduce your taxable income and increase your refund or reduce tax payable.

Q8: Is Standard Deduction applicable for ITR-2 filers (capital gains income + salary)?

Yes. If you have salary income in addition to capital gains, you can claim Standard Deduction on your salary portion in ITR-2. It applies to the salary component regardless of other income heads.

Expert Tax-Saving Tips for Salaried Employees in 2026

• Compare Old vs New Regime every year — tax laws change, and the better regime for you may shift
• Claim all three deductions under Section 16: Standard Deduction + Entertainment Allowance (Govt employees) + Professional Tax
• If in New Regime: Focus on NPS (Section 80CCD(2) — employer’s contribution) which is still allowed
• Check your AIS (Annual Information Statement) on incometax.gov.in to verify all salary income reported
• File ITR before 31st July to avoid late fees and interest
• If switching regimes, inform your employer at the beginning of the financial year
• For salary above ₹12.75 Lakh: carefully calculate whether Old or New Regime saves more tax
• Use Form 12BB to declare all deductions to your employer for accurate TDS calculation

Conclusion

The Standard Deduction is one of the most taxpayer-friendly provisions in India’s income tax law. It is simple, automatic, and requires zero effort — yet saves every salaried employee thousands of rupees every year. For FY 2025-26 (AY 2026-27), with the Standard Deduction enhanced to ₹75,000 under the New Tax Regime and the nil-tax threshold effectively at ₹12.75 Lakh, this is one of the most beneficial periods for salaried taxpayers in India.

Whether you earn ₹5 Lakh or ₹50 Lakh, make sure you are maximising this deduction correctly in your tax return. And if you are unsure about which tax regime to choose, a quick consultation with a tax expert can save you significantly more than the cost of advice.

Disclaimer: This blog is for educational and informational purposes only. Tax laws are subject to frequent amendments. Please consult a qualified tax practitioner or CA for advice specific to your financial situation. All tax calculations are illustrative and based on FY 2025-26 tax slabs.