PERSONAL FINANCE

What Is Standard Deduction? The Tax Break You Don’t Have to Do Anything to Claim

VC By Victor Cranson · July 29, 2026 · 3 min read

Standard deduction is a flat amount automatically subtracted from a salaried individual’s (and pensioner’s) gross salary income before calculating taxable income, without requiring any receipts, proof of expense, or specific investment. It exists to give salaried taxpayers a benefit roughly comparable to the expense deductions that business owners and professionals can claim against their income, since a salaried employee generally has no way to deduct genuine work-related costs the way a business can deduct operating expenses.

What makes standard deduction unusual compared to most other deductions is its simplicity: there’s nothing to invest in, nothing to submit, and nothing to plan around. It applies automatically to eligible salary income.

How much the standard deduction is currently worth

The amount has been revised across recent Union Budgets and currently differs slightly between the two tax regimes. Under the new tax regime, the standard deduction for salaried individuals was increased to ₹75,000 from FY 2024-25 onward. Under the old tax regime, the standard deduction remains at ₹50,000. Because this figure has changed in recent budgets and could be revised again, it’s worth confirming the exact amount applicable for the specific financial year you’re filing for on the Income Tax Department’s portal.

Pensioners receiving a pension from a former employer are also eligible for the standard deduction on that pension income, treated similarly to salary income for this purpose.

Why it applies under both regimes

When the new tax regime was first introduced, it excluded most deductions, including standard deduction, in exchange for lower slab rates. This changed in a subsequent budget, which extended standard deduction to the new regime as well, making it one of the very few deductions available regardless of which regime a salaried taxpayer chooses. This is a meaningful detail: even someone who has opted for the new regime specifically because they have few other deductions to claim still gets this one, automatically.

What it actually does to your tax calculation

Standard deduction is subtracted directly from gross salary income, before any other calculation, reducing your taxable salary income by that flat amount regardless of your actual expenses, commute costs, or anything else. For someone with a gross salary of ₹10 lakh under the new regime, the standard deduction alone brings taxable salary income down to ₹9.25 lakh, before any other applicable calculation, without needing to submit a single document proving any expense was actually incurred.

Standard deduction versus itemized deductions

Unlike deductions such as Section 80C or 80D, which require you to actually invest or spend money in specific, eligible ways and then claim it with proof, standard deduction requires nothing beyond being a salaried employee or pensioner. It’s the tax system’s acknowledgment that salaried income, unlike business income, doesn’t naturally come with deductible expenses built into how it’s earned, so a flat, no-questions-asked amount is provided instead.

Bottom Line

Standard deduction is a flat, automatic reduction to taxable salary income available to salaried employees and pensioners under both tax regimes, requiring no investment, no receipts, and no active claim beyond simply being eligible. It’s a small but genuinely free tax benefit that virtually every salaried taxpayer in India already receives, whether or not they realize it’s happening in the background of their tax calculation.

This article is for general information and isn’t personalized tax advice. Confirm the current financial year’s standard deduction amount on the Income Tax Department’s official portal.