Standard Deduction ₹75,000: Who Gets It in FY 2025-26

The standard deduction is the easiest tax benefit you will ever claim - because you don't have to claim it at all. It's automatic, needs zero paperwork, and in FY 2025-26 it's the quiet hero behind the "salary up to ₹12.75 lakh is tax-free" headline. Here's everything worth knowing about it.

What is the standard deduction?

It's a flat amount knocked off your salary income before tax is calculated. No bills, no investments, no conditions - if you earn a salary, it applies. Think of it as the government's acknowledgement that earning a salary has costs (commuting, upskilling, that laptop repair) without making you itemise any of them.

A quick history: it existed years ago, was scrapped, and made a comeback in 2018 (replacing the old transport and medical reimbursement allowances). Since then it's been steadily raised, and Budget 2024 bumped the new-regime amount to where it stands today.

The amounts for FY 2025-26

The number depends on your regime:

• New regime: ₹75,000
• Old regime: ₹50,000

Yes, the new regime - famous for stripping away deductions - actually gives you a bigger standard deduction. It's one of the very few deductions the new regime not only kept but enhanced, precisely so that salaried people wouldn't feel short-changed for switching.

One important cap: the deduction can't exceed your salary itself. If your salary income is ₹40,000, your deduction is ₹40,000, not ₹75,000.

Who gets it?

• Salaried employees - private sector, government, contractual staff on payroll. If your income is taxed under the head "salaries", you're in.
• Pensioners - because pension from a former employer is taxed as salary income, pensioners get the same standard deduction. This is a genuinely useful and under-appreciated benefit for retirees.

Who doesn't get it:

• Freelancers and consultants whose income is taxed as business or professional income. No salary head, no standard deduction (they claim actual expenses instead). Their compliance runs on a different track entirely, covered in GST invoicing for freelancers.
• Family pensioners (receiving pension after the death of the pensioner) - that income falls under "other sources" and gets a separate, smaller deduction with its own rules; check with a CA for the exact treatment in your regime.

No proof needed - really

This bears repeating because people keep asking: you do not need to submit anything to get the standard deduction. No rent receipts, no premium receipts, no declaration form. Your employer applies it automatically while computing TDS, and the ITR form applies it automatically when you file.

Compare that with old-regime deductions like Section 80C or HRA, where you need investment proofs and rent receipts. The standard deduction is the one benefit that asks nothing of you.

If you moonlight or hold two jobs in a year, note that the deduction applies once on your total salary income - not once per employer. Two Form 16s don't mean two deductions.

How it interacts with the Section 87A rebate

This is where the ₹75,000 becomes genuinely powerful in FY 2025-26.

Under the new regime, the Section 87A rebate wipes out tax of up to ₹60,000 as long as your taxable income is within ₹12 lakh. The standard deduction is what gets many salaries under that line:

• Gross salary: ₹12,75,000
• Less standard deduction: ₹75,000
• Taxable income: ₹12,00,000 - exactly at the rebate threshold
• Slab tax of ₹60,000 is fully cancelled by the rebate
• Tax payable: ₹0

Without the standard deduction, only salaries up to ₹12 lakh would be tax-free; with it, the effective ceiling rises to ₹12.75 lakh. The full mechanics - including what happens just above the line via marginal relief - are in our guide on tax-free income up to ₹12 lakh.

The same logic works at the margins everywhere: at any salary level, the deduction saves you tax at your top slab rate. For someone in the 30% bracket under the new regime, ₹75,000 off taxable income means roughly ₹23,400 saved per year including cess.

Standard deduction and your regime choice

Because the amounts differ - ₹75,000 new vs ₹50,000 old - the standard deduction itself tilts the scales slightly towards the new regime. It's a ₹25,000 head start before the old regime's other deductions even enter the conversation.

That said, regime choice should be made on your full picture: HRA, home loan, 80C, insurance, the lot. Our new vs old regime comparison walks through worked examples at four salary levels, and the income tax calculator will crunch your specific numbers in under a minute.

Where you'll see it (and where you won't)

A common confusion: the standard deduction never appears on your payslip. Payslips show earnings and deductions like PF and professional tax - the standard deduction is a tax computation item, visible in Form 16 Part B and in your ITR, not in your monthly salary statement. So if you're scanning your payslip looking for a ₹6,250 monthly line item, stop - it doesn't work that way. Your employer simply factors it in when working out how much TDS to cut each month.

That's also why your in-hand salary is higher than a naive slab calculation would suggest - the deduction quietly lowers the TDS on every month's pay.

The short version

• Flat ₹75,000 off salary income in the new regime, ₹50,000 in the old - automatic, no proof, no forms.
• Salaried employees and pensioners get it; freelancers and family pensioners don't (the latter have separate rules).
• It applies once per year, not once per employer.
• Its biggest FY 2025-26 trick: pushing a ₹12.75 lakh salary down to ₹12 lakh taxable, unlocking the full 87A rebate and a zero tax bill.

It's the rare part of the Income Tax Act that requires nothing from you and gives back every single year. Enjoy it.

Frequently asked questions

What is the standard deduction for FY 2025-26?

₹75,000 under the new tax regime and ₹50,000 under the old regime. It is a flat amount deducted from salary income before tax is computed, and it cannot exceed your salary itself.

Do I need to submit proof for the standard deduction?

No. There is nothing to declare, invest in or produce receipts for. Your employer applies it automatically when computing TDS, and the ITR form applies it automatically when you file.

Who is eligible for the standard deduction?

Salaried employees and pensioners, because pension from a former employer is taxed under the head salaries. Freelancers and consultants taxed under business or professional income do not get it, and family pension has its own separate and smaller deduction.

Is the standard deduction available in the new tax regime?

Yes, and at a higher amount than the old regime. The new regime allows ₹75,000 against the old regime's ₹50,000, making it one of the few deductions the new regime kept and increased.

Can I claim the standard deduction twice if I changed jobs?

No. It applies once on your total salary income for the year, not once per employer. Two Form 16s in a year still give you a single ₹75,000 deduction, which is a common reason job changers end up with tax payable at filing time.

Why is the standard deduction not shown on my payslip?

Because it is a tax computation item, not a salary component. Payslips show earnings and statutory deductions like PF and professional tax. The standard deduction appears in Form 16 Part B and in your ITR, and its effect on your payslip is indirect, through lower monthly TDS.

How much tax does the ₹75,000 standard deduction save?

It saves tax at your top slab rate. In the 30% bracket that is roughly ₹23,400 a year including cess. For a salary of ₹12.75 lakh its effect is larger in practice, because it brings taxable income down to ₹12 lakh and unlocks the full ₹60,000 Section 87A rebate.