How to Save Income Tax on Salary in 2026

Maximum deduction: Rs. 75,000 under the new regime, Rs. 50,000 under the old regime (FY 2026-27). No bills, no proofs — it applies automatically to salary income.

Standard deduction needs no investment. Salaried taxpayers get Rs. 75,000 off taxable salary under the new regime and Rs. 50,000 under the old regime. It is the single biggest reason low-paperwork taxpayers land in the new regime.

Maximum deduction: Rs. 1,50,000 — but only under the old regime (FY 2026-27). In the new regime, 80C investments save zero tax, so never invest 'for 80C' without checking your regime first.

Note: You can avail maximum tax benefit of up to rs.1,50,000. It is combined of all investment listed below under this section 80C except the national pension system(NPS).

*Investment Options under Section 80C

Employee Provident Fund account gets automatically opened when you join any organization (any company having more than 20 employees has to register with the EPFO).

Some organization also Calls it Central Provident Fund (CPF) or Voluntary Provident Fund (VPF).

The employer contribution to your EPF is tax-free, and your contribution is tax-deductible under Section 80C of the Income Tax Act.

The interest earned and the money you eventually withdraw after the mandatory specified period (5 years) are exempted from income tax.

EPF accounts yield 8.25% annually (the FY 2025-26 rate; FY 2026-27 is not declared yet).

In EPF, the amount is paid at the time of retirement or resignation, whichever occurs earlier. You Can also Withdraw this amount in case of any medical emergency.

EPF is one of the best way to save income tax on your salary.

Maximum Deduction: Rs. 1,50,000 (AY 2020-21)

If Your Employer Doesn't offer EPF then You Can Open a PPF Account At any bank and avail of the income tax deduction under Section 80C of the Income Tax Act.

The interest earned and the returns are not taxable under Income Tax.

In Case of any Emergency, You can get loan Against your PPF balance.

Equity Linked Savings Scheme or ELSS is a type of mutual fund scheme where most of the fund corpus is invested in equities or equity-related products.

Investments made under ELSS eligible for a tax deduction of up to Rs. 1.5 lakh under Section 80C of the Income Tax Act.

At maturity, gains are not fully tax-free — equity LTCG tax applies at 12.5% on gains above Rs 1.25 lakh a year.

National Saving Certificate or NSC are bonds issued by the government for small savings and one can purchase these bonds from the Indian post office.

Minimum investment one can make is Rs 100 with a lock-in period of 5 years.

The current interest rate on NSC is 7.7% (Oct-Dec 2026 quarter).

The interest rate on NSC is decided by the government every year. It is linked to the yield of 10-year government bonds.

NSC is also a tax-saving investment avenue wherein investments made are eligible for a tax deduction of up to Rs 1.5 lakh under Section 80C of the Income Tax Act. However, the interest earned is taxable.

Tax Saving FD is a special fixed deposit option offered by banks.

It comes with a lock-in period of 5 years (minimum) and 10 years (maximum).

The interest rate on tax-saving FDs varies from bank to bank and usually ranges from 6.5-7.5%.

Investors get a tax benefit of up to Rs 1.5 lakh under Section 80C of the Income Tax Act.

Parents of a girl child below the age of 10 can get this deduction.

This account has a tenure of 21 years or until the girl marries after turning 18.

You can open an account at any branch of an authorised bank or at a post office.

It has an interest above prevailing rates (currently 8.2%) and the interest is tax-free.

Senior Citizens Savings Scheme or SCSS is available to people above 60 years.

Contribution to the SCSS is tax-deductible up to Rs 1.5 lakh.

The rate for SCSS is higher than prevailing FD rates and is currently 8.2% (interest is taxable).

Maximum Deduction: Rs. 1,50,000 (AY 2020-21)*

The National Pension System or NPS allows you to invest in equity and debt pension funds and build a retirement corpus.

After retirement, You can take withdraw a certain percentage of the corpus. As an NPS account holder, you will receive the remaining amount as a monthly pension post your retirement.

You Can Open an NPS Account with a bank or LIC or Directly online at NSDL.

This deduction under Section 80CCD(1B) up to Rs 50,000 is only available for contributions to the NPS.

Maximum Deduction: Rs. 50,000 (AY 2020-21)*

The annual premium paid for life insurance in the name of the taxpayer or the taxpayer’s wife and children is an eligible tax-saving payment under Section 80C of the Income Tax Act.

The deduction is valid only if the premium is less than 10% of the sum assured.

The tuition fee paid for the education of two children is eligible for tax deduction under Section 80C of the Income Tax Act.

The fee can be paid to any school, college, university or educational institute situated in India. The fees have to be for a full-time course only.

Home loan EMI has two-part, principal and interest.

The repayment of the principal of a loan taken to buy or construct a residential property is eligible for tax deductions under Section 80C of the Income Tax Act.

This deduction is also applicable on stamp duty, registration fees and transfer expenses.

Want To Earn More Money? Check Out This Article on Different ways To Earn Money.

House Rent Allowance (HRA) is the amount that your employer pays you towards the rent of your accommodation.

Every salaried individual living in a rented flat is entitled to claim HRA to save on taxes.

HRA is regulated by the provisions of Section 10(13A) of the Income Tax Act.

A salaried individual can claim HRA exemptions only if these conditions are met:

• HRA is received as part of the salary package
• If an employee stays in a rented house
• Rent paid is more than 10% of the salary

Don’t forget to take rent receipts from your house owner.

You can also give rent to your parents. It would also work for tax saving.

Home loan interest payment enjoys separate tax saving.

The limit of deduction for home loan interest payment is ₹2.0 lacs.

This deduction can give you a very big tax saving. However, the loan amount should be big to get the full benefit.

Every individual can claim a deduction under Section 80D for their medical insurance which is taken from their total income in any given year.

An individual can claim a deduction of up to Rs 25,000 for the insurance of self, spouse, and dependent children.

An additional deduction for the insurance of parents is available to the extent of Rs 25,000 if they are less than 60 years of age, or Rs 50,000 (as per the Budget 2018) if your parents are aged above 60.

Health insurance is like "Ek Teer see Do Nishan". You and Your Family Will be Protected and You can Save Income Tax on Your Salary.

Any individual who has applied for a loan for higher education can avail of the benefits of tax saving provided by Section 80E of the Income Tax Act, 1961.

Even if an individual has availed the maximum available deduction of INR. 1,50,000 under section 80C, they can still avail deduction under Section 80E.

The loan should be taken for the higher education of self, spouse or children or for a student for whom the individual is a legal guardian.

Parents can easily claim this deduction for the loan taken for the higher studies of their children.

Income Tax Deduction can be claimed only on the interest component.

You can save tax on your donations.

However, not every charity gives you 100% tax saving.

Donations to the PM relief fund, some notified NGO and political parties can give you the 100% tax benefit.

You can also donate to scientific institutions and religious body and claim a tax rebate.

Most salaried taxpayers in 2026 need exactly two numbers: tax under the new regime with zero deductions, and tax under the old regime with every deduction on this page. Whichever is lower wins — and for anyone without HRA and home-loan interest, the new regime usually wins walking away.

If your old-regime pile (80C, HRA, 80D, home-loan interest) beats the new-regime slabs, claim it properly and keep proofs. Otherwise stop buying tax-saving products you don't need.

Still unsure which side you are on? Run both columns through the regime comparison before March.