Please remember that AY refers to the Assessment Year in taxation, not to the Accounting Year.
Accounting Year is known as the Financial Year (FY)
For the 2025–26 filing season (income you earned in 2025-26), the biggest changes in deductions are higher standard deduction amounts, a much larger SALT (state and local tax) cap, several new or expanded special deductions, and the continued emphasis on the “New” simplified tax regime versus the traditional deduction-heavy regime.
The impact depends on your income level and whether you itemize or use the standard deduction.
For Indian residents, most changes in 2026 are about regime choice and gradual restructuring of deductions, not about big new individual deduction sections.
The new tax regime under section 115BAC continues as the default with simplified slabs and limited deductions, while the old regime with popular deductions like 80C (investments), 80D (health insurance), and 10(10D) (life insurance maturity) remains available if you opt for "Old" instead of the default "New Regime".
Policy discussions and draft rules for FY 2026–27 point toward consolidating many scattered exemptions and deductions into fewer, broader categories over time, with an explicit push to make more people stay in the new regime. The final decisions are still under process.
If you usually claim a lot of deductions (EPF/PPF/ELSS under 80C, medical premiums under 80D, home loan interest under 24(b), etc.), you may still save more by staying with the old regime for now, but you need to compare both regimes each year.
If your salary structure is simple and you don’t invest heavily just for tax saving, you may pay less tax or file more easily in the new regime, since rates are lower and compliance is lighter, even with fewer deductions.
From April 2026, some interest deductions against dividend and mutual fund unit income are being withdrawn, which can slightly increase tax if you borrow to invest.
Important Changes in the Income Tax Act and Tax Filing
1) New Legislation: The Income Tax Act, 2025, replaces the 1961 Act starting April 1, 2026.
2) Deadline Changes: The filing deadline for non-audit business cases has been extended from July 31 to August 31. For Business entities and audit-mandated firms, the last date is 31st July 2026.
3) Terminology Shift: The new Act is moving toward the term "Tax Year" instead of "Assessment Year" for future filings.
4) Introduction of a simplified New Tax Regime, which will become the default Tax Regime from Financial Year 2026-27. So, if you prefer to be taxed under the Old Regime, you should voluntarily choose it each year. Otherwise, you will be taxed by default under the New Regime (if you forget to choose any particular year) and there will be no trace back to the Old Regime.
There is no change in the deadline for the salaried class. The last date, in their case, is 31st July, 2026 for Financial Year 2025-26.
For the 2025–26 filing season (income you earned in 2025-26), the biggest changes in deductions are higher standard deduction amounts, a much larger SALT (state and local tax) cap, several new or expanded special deductions, and the continued emphasis on the “New” simplified tax regime versus the traditional deduction-heavy regime.
The impact depends on your income level and whether you itemize or use the standard deduction.
For Indian residents, most changes in 2026 are about regime choice and gradual restructuring of deductions, not about big new individual deduction sections.
The new tax regime under section 115BAC continues as the default with simplified slabs and limited deductions, while the old regime with popular deductions like 80C (investments), 80D (health insurance), and 10(10D) (life insurance maturity) remains available if you opt for "Old" instead of the default "New Regime".
For Tax Year 2027-28 (Income earned during 2026-27)
Policy discussions and draft rules for FY 2026–27 point toward consolidating many scattered exemptions and deductions into fewer, broader categories over time, with an explicit push to make more people stay in the new regime. The final decisions are still under process.
Points to Consider While Filing the Return for AY 2026-27 (Income During FY 2025-26)
If you usually claim a lot of deductions (EPF/PPF/ELSS under 80C, medical premiums under 80D, home loan interest under 24(b), etc.), you may still save more by staying with the old regime for now, but you need to compare both regimes each year.
If your salary structure is simple and you don’t invest heavily just for tax saving, you may pay less tax or file more easily in the new regime, since rates are lower and compliance is lighter, even with fewer deductions.
From April 2026, some interest deductions against dividend and mutual fund unit income are being withdrawn, which can slightly increase tax if you borrow to invest.
