Individuals face a 39% maximum marginal income tax rate in Tax Year 2026-2027

The maximum marginal income tax rate for certain individuals and entities in Tax Year 2026-2027 is 39%. This rate applies to specific income types taxed at the Maximum Marginal Rate (MMR) rather than standard tax slabs. This MMR is designed as an anti-avoidance measure, particularly for income from business trusts, alternative investment funds, private discretionary trusts, and associations of persons with indeterminate beneficiary shares. The 39% rate is based on the default new tax regime's highest slab rate plus surcharge and cess. A higher rate of 42.744% can apply in exceptional cases, such as when the old tax regime is used or if a member of an association of persons is taxed at that higher rate. Taxpayers must determine their applicable tax regime and surcharge thresholds.