Union Budget 2026: How India’s tax slabs stack up against US and UK — Check here

As Finance Minister Nirmala Sitharaman presented the Union Budget 2026 today, income tax once again took centre stage. Taxpayers across the country expected more income relief, a simpler tax structure and several other benefits. Amid discussions over recently announced tax proposals that did not include any changes to tax slabs or rates, here's how India’s income tax system compares with those of other countries.

Here's how India's income tax compares with major economies such as the US and the UK.

Minimum income tax rates

India levies a lower minimum slab rate of 5%, while the United Kingdom and the United States impose minimum income tax rates of 20% and 10%, respectively. “At the lower end of the income spectrum, India offers a relatively favourable entry point to taxpayers,” according to Chandni Anandan, Tax Expert at ClearTax.

Maximum income tax rates

Higher income tax rates vary significantly across countries. India imposes a maximum income tax rate of 30%, making it a moderate-tax economy, as per the expert. In comparison, the US levies a marginal income tax rate of 37%, while the UK has the highest at 45%. These rates do not include surcharges, cess, penalties, or other additional taxes.

A look at deductions

According to Anandan, India provides a variety of deductions under the old tax regime, promoting savings through insurance, provident funds, and long-term investments.

Similarly, the US is seen as a deduction-rich tax system, giving taxpayers the option to choose between a flat standard deduction and itemised deductions for charitable contributions, mortgage interest, and specific state and local taxes, the expert noted.

Meanwhile, the UK follows a relatively simple tax structure with comparatively limited deduction options, such as charity donations and retirement contributions.

How do capital gains vary?

With a market cap of $5.32 trillion, India imposes a 12.5% long-term capital gains tax. In contrast, the UK applies capital gains tax rates of up to 24%, while the US levies a capital gains tax rate of up to 20% based on income.

“Capital gains taxation further highlights India’s competitive positioning. Despite being a large equity market with a total market capitalisation of approximately $5.32 trillion, India levies long-term capital gains tax at 12.5% on specified assets. In contrast, the United Kingdom taxes capital gains at rates of up to 24%, without a distinction between short-term and long-term holdings,” the tax expert said.

Apart from this, many major economies, such as the US, UK, and Japan, levy social security or payroll taxes alongside income taxes, which significantly increase the effective tax burden on individuals. In contrast, India does not impose a comprehensive social security tax on individual earnings.

Disclaimer: This story is for educational purposes only. The views and recommendations made above are those of individual analysts or experts, and not of Mint. We advise investors to check with certified experts before making any investment decisions.