income tax slab rates define how much tax the individuals should pay for different income groups. The income tax slabs relaxation is the biggest relief brought in the financial year 2025-26, greatly reducing the tax liability for many. Other added benefits come from higher rebate limit and TDS threshold limits.
Key Highlights
Tax slab changes under the new regime for FY 2025-26:
- Income up to Rs. 12 lakhs made zero-tax due to an increased rebate of Rs. 60,000.
- Basic exemption limit extended to Rs. 4 lakhs, from Rs. 3 lakhs.
- 30% tax slab rate of will now apply on income above Rs. 24 lakh instead of Rs. 15 lakh.
Income Tax Slabs for FY 2025-26 (AY 2026-27) under New Tax Regime
The income tax slabs under new regime for FY 2025-26 are: Up to Rs. 4 lakhs – Nil; Rs. 4 lakhs to Rs. 8 lakhs – 5%; Rs. 8 lakhs to Rs. 12 lakhs – 10%; Rs. 12 lakhs to Rs. 16 – lakhs – 15%; Rs. 16 lakhs to Rs. 20 lakhs – 20%; Rs. 20 lakhs to Rs. 24 lakhs – 25%; Above Rs. 24 lakhs – 30%. A tabular version of the slab rates are given below.
| Income Tax Slabs for FY 2025-26 (AY 2026-27) | Income Tax Rates for FY 2025-26 (AY 2026-27) |
| Up to Rs. 4 lakh | Nil |
| Rs. 4 lakh to Rs. 8 lakh | 5% |
| Rs. 8 lakh to Rs. 12 lakh | 10% |
| Rs. 12 lakh to Rs. 16 lakh | 15% |
| Rs. 16 lakh to Rs. 20 lakh | 20% |
| Rs. 20 lakh to Rs. 24 lakh | 25% |
| Above Rs. 24 lakh | 30% |
Rebate: Due to the increase in rebate to Rs. 60,000 under the new regime, the total tax for an income up to Rs. 12 lakhs is NIL. This rebate is not applicable for special tax income such as capital gains, crypto income, online gaming income, etc..
Income Tax Slabs for FY 2025-26 (AY 2026-27) under Old Tax Regime
The income tax slab under the old tax regime has not changed. The income tax slabs under the old tax regime are as follows:
1.Income Tax Slabs for Individuals below 60 Years, NRI and HUF
| Income Tax Slab (Rs. ) | Income Tax Rate |
| Up to 2,50,000 | Nil |
| 2,50,001 – 5 lakh | 5% |
| 5 lakh – 10 lakh | 20% |
| Above 10 lakh | 30% |
Popular Deductions Allowed under Old Tax Regime
- 80C, 80D, 80G, 80TTA
- HRA, LTA, home loan interest (Section 24)
- Education loan interest (Section 80E), etc.
2.Income Tax Slabs for Senior Citizens aged between 60 to 80 Years
The income tax slabs for senior citizens aged above 60 years but below 80 years under the old tax regime are as follows:
| Income Tax Slab (Rs. ) | Income Tax Rate (Rs. ) |
| Up to 3 lakh | Nil |
| 3 lakh – 5 lakh | 5% |
| 5 lakh – 10 lakh | 20% |
| Above 10 lakh | 30% |
3.Income Tax Slabs for Super Senior Citizens above 80 Years
For super senior citizens aged above 80 years, the basic exemption limit increases to Rs. 5 lakh.
| Income Tax Slab (Rs. ) | Income Tax Rate (Rs. ) |
| Up to 5 lakh | Nil |
| 5 lakh – 10 lakh | 20% |
| Above 10 lakh | 30% |
Note: There is no separate slab benefit for senior citizens under the new tax regime
New Tax Regime v/s Old Tax Regime – Which is Better?
1.Comparison of Tax Slabs
A detailed comparison of old and new tax regime tax slabs, rates, and surcharge for FY 2025-26 is tabulated below:
1.1.For individuals aged less than 60 years and Non-Residents
| Old Tax Regime | New Tax Regime u/s 115BAC | ||||||
| Income Tax Slab | Income Tax Rate | Tax calculation | Surcharge | Income Tax Slabs for FY 2025-26 (AY 2026-27) | Income Tax Rates for FY 2025-26 (AY 2026-27) | Tax calculation | Surcharge |
| Up to Rs. 2,50,000 | Nil | Nil | Nil | Up to Rs. 4 lakhs | Nil | Nil | Nil |
| Rs. 2,50,001 – Rs. 5 lakh | 5% | 5% above Rs. 2,50,000 | Nil | Rs. 4 lakhs to Rs. 8 lakhs | 5% | 5% of income above Rs. 4 lakhs | Nil |
| Rs. 5 lakh – Rs. 10 lakh | 20% | Rs. 12,500 + 20% above Rs. 5 lakh | Nil | Rs. 8 lakhs to Rs. 12 lakhs | 10% | Rs.20,000+ 10% of income above Rs. 4 lakhs | Nil |
| Rs. 10 lakh- Rs. 50 lakh | 30% | Rs. 1,12,500 + 30% above Rs. 10 lakh | Nil | Rs. 12 lakhs to Rs. 16 lakhs | 15% | Rs. 60,000 + 15% of income above Rs. 8 lakhs | Nil |
| Rs. 50 lakh- Rs. 1 crore | 30% | Rs. 1,12,500 + 30% above Rs. 10 lakh | 10% | Rs. 16 lakhs to Rs. 20 lakhs | 20% | Rs. 1,20,000 + 20% of income above Rs. 16 lakhs | Nil |
| Rs. 1 crore- Rs. 2 crore | 30% | Rs. 1,12,500 + 30% above Rs. 10 lakh | 15% | Rs. 20 lakhs to Rs. 24 lakhs | 25% | Rs. 2 lakhs + 25% of the income above Rs. 10 lakhs | Nil |
| Rs. 2 crore- Rs. 5 crore | 30% | Rs. 1,12,500 + 30% above Rs. 10 lakh | 25% | Above Rs. 24 lakhs | 30% | Rs. 3 lakhs + 30% of income above Rs. 24 lakhs | Nil |
| Above Rs. 5 crore | 30% | Rs. 1,12,500 + 30% above Rs. 10 lakh | 37% | Rs. 24 lakhs- Rs. 50 lakhs | 30% | Rs. 3 lakhs + 30% of income above Rs. 24 lakhs | Nil |
| Rs. 50 lakhs- Rs. 1 crores | 30% | Rs. 3 lakhs + 30% of income above Rs. 24 lakhs | 10% | ||||
| Rs. 1 crores- Rs. 2 crores | 30% | Rs. 3 lakhs + 30% of income above Rs. 24 lakhs | 15% | ||||
| Above Rs. Rs. 2 crores | 30% | Rs. 3 lakhs + 30% of income above Rs. 24 lakhs | 25% | ||||
The bottom line: New regime is more beneficial here due to relaxed slab rates.
1.2.In case of a Resident Senior Citizen aged between 60 to 80 years
| Old Tax Regime | New Tax Regime u/s 115BAC | ||||||
| Income Tax Slab | Income Tax Rate | Tax calculation | Surcharge | Income Tax Slabs for FY 2025-26 (AY 2026-27) | Income Tax Rates for FY 2025-26 (AY 2026-27) | Tax calculation | Surcharge |
| Up to Rs. 3 lakh | Nil | Nil | Nil | Up to Rs. 4 lakhs | Nil | Nil | Nil |
| Rs. 3 lakh – Rs. 5 lakh | 5% | 5% above Rs. 2,50,000 | Nil | Rs. 4 lakhs to Rs. 8 lakhs | 5% | 5% of income above Rs. 4 lakhs | Nil |
| Rs. 5 lakh – Rs. 10 lakh | 20% | Rs. 10,000 + 20% above Rs. 5 lakh | Nil | Rs. 8 lakhs to Rs. 12 lakhs | 10% | Rs.20,000+ 10% of income above Rs. 4 lakhs | Nil |
| Rs. 10 lakh- Rs. 50 lakh | 30% | Rs. 1,10,000 + 30% above Rs. 10 lakh | Nil | Rs. 12 lakhs to Rs. 16 lakhs | 15% | Rs. 60,000 + 15% of income above Rs. 8 lakhs | Nil |
| Rs. 50 lakh- Rs. 1 crore | 30% | Rs. 1,10,000 + 30% above Rs. 10 lakh | 10% | Rs. 16 lakhs to Rs. 20 lakhs | 20% | Rs. 1,20,000 + 20% of income above Rs. 16 lakhs | Nil |
| Rs. 1 crore- Rs. 2 crore | 30% | Rs. 1,10,000 + 30% above Rs. 10 lakh | 15% | Rs. 20 lakhs to Rs. 24 lakhs | 25% | Rs. 2 lakhs + 25% of the income above Rs. 10 lakhs | Nil |
| Rs. 2 crore- Rs. 5 crore | 30% | Rs. 1,10,000 + 30% above Rs. 10 lakh | 25% | Above Rs. 24 lakhs | 30% | Rs. 3 lakhs + 30% of income above Rs. 24 lakhs | Nil |
| Above Rs. 5 crore | 30% | Rs. 1,10,000 + 30% above Rs. 10 lakh | 37% | Rs. 24 lakhs- Rs. 50 lakhs | 30% | Rs. 3 lakhs + 30% of income above Rs. 24 lakhs | Nil |
| Rs. 50 lakhs- Rs. 1 crores | 30% | Rs. 3 lakhs + 30% of income above Rs. 24 lakhs | 10% | ||||
| Rs. 1 crores- Rs. 2 crores | 30% | Rs. 3 lakhs + 30% of income above Rs. 24 lakhs | 15% | ||||
| Above Rs. Rs. 2 crores | 30% | Rs. 3 lakhs + 30% of income above Rs. 24 lakhs | 25% | ||||
The bottom line: New regime is more beneficial here due to relaxed slab rates.
1.3.In case of a Resident Senior Citizen aged above 80 years
| Old Tax Regime | New Tax Regime u/s 115BAC | ||||||
| Income Tax Slab | Income Tax Rate | Tax calculation | Surcharge | Income Tax Slabs for FY 2025-26 (AY 2026-27) | Income Tax Rates for FY 2025-26 (AY 2026-27) | Tax calculation | Surcharge |
| Up to Rs. 5 lakh | Nil | Nil | Nil | Up to Rs. 4 lakhs | Nil | Nil | Nil |
| Rs. 5 lakh – Rs. 10 lakh | 20% | 20% above Rs. 5 lakh | Nil | Rs. 4 lakhs to Rs. 8 lakhs | 5% | 5% of income above Rs. 4 lakhs | Nil |
| Rs. 10 lakh- Rs. 50 lakh | 30% | Rs. 1,00,000 + 30% above Rs. 10 lakh | Nil | Rs. 8 lakhs to Rs. 12 lakhs | 10% | Rs.20,000+ 10% of income above Rs. 4 lakhs | Nil |
| Rs. 50 lakh- Rs. 1 crore | 30% | Rs. 1,00,000 + 30% above Rs. 10 lakh | 10% | Rs. 12 lakhs to Rs. 16 lakhs | 15% | Rs. 60,000 + 15% of income above Rs. 8 lakhs | Nil |
| Rs. 1 crore- Rs. 2 crore | 30% | Rs. 1,00,000 + 30% above Rs. 10 lakh | 15% | Rs. 16 lakhs to Rs. 20 lakhs | 20% | Rs. 1,20,000 + 20% of income above Rs. 16 lakhs | Nil |
| Rs. 2 crore- Rs. 5 crore | 30% | Rs. 1,00,000 + 30% above Rs. 10 lakh | 25% | Rs. 20 lakhs to Rs. 24 lakhs | 25% | Rs. 2 lakhs + 25% of the income above Rs. 10 lakhs | Nil |
| Above Rs. 5 crore | 30% | Rs. 1,00,000 + 30% above Rs. 10 lakh | 37% | Above Rs. 24 lakhs | 30% | Rs. 3 lakhs + 30% of income above Rs. 24 lakhs | Nil |
| Rs. 24 lakhs- Rs. 50 lakhs | 30% | Rs. 3 lakhs + 30% of income above Rs. 24 lakhs | Nil | ||||
| Rs. 50 lakhs- Rs. 1 crores | 30% | Rs. 3 lakhs + 30% of income above Rs. 24 lakhs | 10% | ||||
| Rs. 1 crores- Rs. 2 crores | 30% | Rs. 3 lakhs + 30% of income above Rs. 24 lakhs | 15% | ||||
| Above Rs. Rs. 2 crores | 30% | Rs. 3 lakhs + 30% of income above Rs. 24 lakhs | 25% | ||||
The bottom line: New regime is more beneficial here due to relaxed slab rates.
2.Other Differences
Let us understand the other difference between the old and the new tax regime.
| Basis of Difference | Old Tax Regime | New Tax Regime |
| Deductions and Exemptions | The old tax regime offers a variety of deductions and exemptions. For example, House Rent Allowance, investment deductions under section 80C, etc.. | The New Tax Regime has limited exemptions and deductions. |
| Beneficial for taxpayers | The old tax regime promotes tax savings through planned investments, encouraging long-term financial security and retirement planning. | The new tax regime is more beneficial for middle-income earners, without any elaborate tax planning strategies. |
| Default Regime | The old tax regime is not the default regime, still the taxpayers can choose to file under the old regime by exercising the option. | The new tax regime is the default tax regime. |
| Standard deduction | Rs. 50,000 allowed for salaried employees. | Rs. 75,000 allowed for salaries of employees. |
| Rebate | Maximum Rs. 12,500 allowed. | For FY 2025-26, maximum Rs. 60,000 allowed. For FY 2024-25, a maximum of Rs. 25,000 is allowed. |
Which is the most Beneficial Tax Regime for FY 2025-26?
- For taxpayers with a lot of tax-saving deductions, often summing up to a few lakhs, the old regime is the most beneficial.
- For taxpayers with limited tax-saving deductions and middle-class income earners, the new regime is the most beneficial.
- The following table shows the break-even deduction for different income levels. If the taxpayer has deductions above the break-even deductions, the old regime will be the most beneficial. Otherwise, the new regime will be the most desirable choice.
| Gross Income (Rs. ) | Break Even Deductions (Rs. ) |
| Up to 5 lakhs | Both the regimes are beneficial |
| 7 lakhs | 1,50,000 |
| 10 lakhs | 4,50,000 |
| 11 lakhs | 5,50,000 |
| 12 lakhs | 6,50,000 |
| 13 lakhs | 6,87,500 |
| 14 lakhs | 5,18,750 |
| 15 lakhs | 5,43,750 |
| 16 lakhs | 5,68,750 |
| 17 lakhs | 6,08,330 |
| 18 lakhs | 6,41,670 |
| 19 lakhs | 6,75,000 |
| 20 lakhs | 7,08,330 |
| 22 lakhs | 7,54,170 |
| 24 lakhs | 7,87,500 |
| 25 lakhs | 8 lakh |
- It is most beneficial for the taxpayers if they choose their most beneficial regime at the beginning of the financial year.
- Taxpayers can estimate their total income, consolidate all their tax-saving deductions, and calculate the taxable income and total tax payable under both regimes to determine which regime is most beneficial.
- The following table shows the most beneficial regime for a deduction amount of Rs.4.5 lakhs.
| Gross Income (Rs. ) | New Regime | Old Regime |
| Up to 5 lakhs | ✓ | ✓ |
| 7 lakhs | X | ✓ |
| 10 lakhs | X | ✓ |
| 11 lakhs | ✓ | X |
| 12 lakhs | ✓ | X |
| 13 lakhs | ✓ | X |
| 14 lakhs | ✓ | X |
| 15 lakhs | ✓ | X |
| 16 lakhs | ✓ | X |
| 17 lakhs | ✓ | X |
| 18 lakhs | ✓ | X |
| 19 lakhs | ✓ | X |
| 20 lakhs | ✓ | X |
| 22 lakhs | ✓ | X |
| 24 lakhs | ✓ | X |
| 25 lakhs | ✓ | X |
Tax Calculation under the New Regime FY 2025-26(AY 2026-27)
Example 1
Mr. Ramu had a salary income of Rs. 12 lakhs. He had invested Rs. 1.5 lakh in PPF and paid Rs. 30,000 towards health insurance of himself, spouse and children.
For FY 2024-25 (AY 2025-26), his tax liability was as follows:
- New Tax Regime: Rs. 71,500
- Old Tax Regime: Rs. 1,10,760
As the tax liability under the new tax regime was less, Mr. Ramu filed his ITR under the new tax regime and saved Rs. 39,260 in taxes. However, for FY 2025-26, Mr. Ramu will have zero tax liability as his income is less than Rs. 12 lakh and is eligible for rebate u/s 87A.
Example 2
Mr. Anban had a salary income of Rs. 25 lakhs in FY 2025-26. He lives in a rented accommodation and pays Rs. 45,000 p.m as rent and claimed Rs. 4 lakh HRA exemption. He also has a house property in his village for which he pays EMI. He also has deductions of Rs. 1.5 lakh u/s 80C, Rs. 50,000 u/s 80D and Rs. 50,000 u/s 80CCD(1B).
For FY 2025-26 (AY 2026-27), his tax liability will be as follows:
- New Tax Regime: Rs. 3,19,800
- Old Tax Regime: Rs. 3,04,200
As the tax liability under the old tax regime was less, Mr. Anban chose to file his ITR under the old tax regime and saved Rs. 15,600 in taxes. This was because of the massive deductions worth Rs. 9 lakh that Mr. Anban could claim. Without these deductions, the new regime would have been beneficial for Mr. Anban.
Therefore, the new tax regime might not be beneficial for all taxpayers. For taxpayers having high deductions and exemptions, the old tax regime still proves to be beneficial. The new tax regime is apt for those taxpayers with fewer or no deductions to claims.
How to Save Taxes under the New Regime FY 2025-26?
Though the options to save taxes under the new regime are limited, the new regime proves to be extremely beneficial with tax planning strategies in place. The following are the ways to save taxes under the new regime:
1.Employer’s Contribution to NPS u/s 80CCD(2)
The employer’s contribution can be claimed as a deduction under this section. Up to 14% of the basic pay can be claimed as a deduction under this section. When you opt for NPS, the employer and you will contribute to the pension scheme.
2.Standard Deduction
Irrespective of whether you have made tax saving deductions or not, you can claim a standard deduction of Rs. 75,000 against your salary income under the new regime.
For salaried individuals, a standard deduction of Rs. 75,000 is allowed under the new regime.
3.Choice of Perquisites
- You can opt for a car leasing scheme if it is provided by your company, through which you can save significant taxes.
- Also, allowances like transport allowance, conveyance allowance, and daily allowance are exempt under the new regime.
- Various perquisites like mobile reimbursement, transport facility provided under railways or airways, etc. are exempt irrespective of the old or new regime.
Structure your CTC accordingly and derive the maximum tax advantage!
Income Tax Changes from 01st April, 2025 (FY 2025-26)
The following are the changes made with effect form 01st April, 2025.
1. Slab Rate Relaxation
As already discussed, the income tax slabs and tax rates are relaxed with effect from FY 2025-26 under the new regime. Income chargeable under the maximum tax rate – 30% has been increased from Rs. 15 lakhs to Rs. 24 lakhs. Basic exemption limit has been relaxed from Rs. 3 lakhs to Rs. 4 lakhs.
2.Rebate Relaxation
Previously, under the new regime, Rs. 25,000 of rebate is allowed, making the income within Rs. 7 lakhs practically tax-free. With effect from FY 2025 – 26, Rs. 60,000 of rebate is allowed for an income within Rs. 12 lakhs under the new regime. This makes income up to Rs. 12 lakhs tax-free.
3.Relaxation of TDS Threshold Limits
If the payment amount does not cross a certain limit during the financial year, no TDS needs to be deducted as per the provisions of the act. This threshold limit has been relaxed from FY 2025-26, making transactions with higher value not liable to TDS. This has eased the compliance burden.
4.Deductions and Exemptions
The important changes brought this year with respect to deductions and exemptions are:
- All the tax benefits of the NPS account have now been extended to the NPS Vatsalya account.
- All the withdrawals from NPS are exempt from 29th August, 2025.
- The tax benefits available to eligible start-ups under section 80-IAC have now been extended until 2030.
Income Tax Slabs for FY 2024-25 (AY 2025-26) under New Tax Regime
The existing new tax regime slabs for FY 2024-25 (AY 2025-26) are as follows:
| Income Tax Slab | Income Tax Rate |
| Up to Rs. 3 lakh | Nil |
| Rs. 3 lakh – Rs. 7 lakh | 5% |
| Rs. 7 lakh – Rs. 10 lakh | 10% |
| Rs. 10 lakh – Rs. 12 lakh | 15% |
| Rs. 12 lakh – Rs. 15 lakh | 20% |
| Rs. 15 lakh- Rs. 50 lakh | 30% |
Rebate under Section 87A is available for income up to Rs. 7 lakh, meaning taxpayers with total income not exceeding Rs. 7 lakh have zero tax liability.
Tax Savings due to New Income Tax Slabs – FY 2024-25 v/s FY 2025-26
The following table illustrates the tax savings under the new regime for FY 2025-26 as compared to FY 2024-25. The income provided in the first column is the taxable income, that is, income after reducing all the eligible deductions and exemptions under the new regime. The other column represent the savings in taxes in FY 2025-26 versus FY 2024-25. This tax saving is fully attributed to relaxation of slab rates.
| Taxable Income Level (Rs. ) | Tax savings for FY 2025-26 (Rs. ) |
| 7 lakhs | 0 |
| 8 lakhs | 31,200 |
| 10 lakhs | 52,000 |
| 12 lakhs | 83,200 |
| 15 lakhs | 36,400 |
| 18 lakhs | 72,800 |
| 20 lakhs | 93,600 |
| 25 lakhs | 1,14,400 |
| 50 lakhs | 1,14,400 |
Surcharge
Surcharge simply refers to tax on tax. It is levied on a percentage of tax, not income. When the taxable income of an individual crosses the limit of Rs. 50 lakhs, surcharge is applicable. The following table provides the surcharge rates for different income groups.
| Income Limit | Surcharge – Old Regime | Surcharge – New Regime |
| Up to Rs. 50 lakhs | Nil | Nil |
| Rs. 50 lakhs to Rs. 1 crores | 5% | 5% |
| Rs. 1 crore to Rs. 2 crore | 15% | 15% |
| Rs. 2 crore to Rs. 5 crore | 25% | 25% |
| More than Rs. 5 crore | 37% | 25% |
For dividends and capital gains income under section 111A, 112A and 112, the maximum surcharge amount is capped at 15%, even if such income crosses the threshold limit of Rs. 2 crore.
Cess
In addition to the income tax and surcharge, a health and education cess of 4% is levied in all cases. Cess is applicable wherever there is income tax payable.
Rebate
- When your total taxable income is within a certain threshold limit, a rebate helps reduce the tax liability to zero.
- The rebate allowed differs based on the choice of regime and the financial year.
- Under the new regime, marginal relief on rebate is available, unlike under the old regime.
- With effect from FY 2025-26, the rebate is not available on special tax income. For example, capital gains, online gaming income, etc.
The following table shows the rebate applicability for FY 2024-25 and FY 2025-26 under new and old regime.
| Financial Year | Regime | Maximum Rebate | Income within which rebate is allowed |
| FY 2024-25 | New | Rs. 25,000 | Rs. 7 lakhs |
| FY 2025-26 | New | Rs. 60,000 | Rs. 12 lakhs |
| FY 2024-25 | Old | Rs. 12,500 | Rs. 5 lakhs |
| FY 2025-26 | Old | Rs. 12,500 | Rs. 5 lakhs |
Note: In all the above cases, the rebate makes the total tax liability zero.
Frequently Asked Questions
What is e-verification of Income tax returns?
The income tax return needs to be verified post submission. It is applicable for all types of return original, belated, revised or updated return. It is mandatory to do verify the return within 30 days from the date of filing. Failure to verify the return will be deemed that you have not filed the return at all.
Is HRA exemption available in new tax regime?
No, HRA exemption u/s10(13A) is not allowed in new tax regime.
How to choose the tax regimes while filing?
For 2024-25 – default regime is new tax regime. But, you can choose the old tax regime while filing ITR if it is beneficial for you. If the total income does includes profit and gains from business & profession and new old regime needs to be opted, then one must file Form 10IEA before the submission of income tax return, within the due date for filing ITR.
Is income up to 12 lakhs tax-free for FY 2025-26?
Yes, if your income is up to Rs. 12 lakhs in the FY 2025-26 you will have zero tax liability. For an income up to Rs. 4 lakhs, the income earned is taxed under NIL rate. But, a rebate of Rs. 60,000 is allowed for an income earned up-to Rs. 12 lakhs because of which, the tax liability comes to NIL for an income up to Rs. 12 lakhs.
Which tax regime is the default?
The new tax regime is the default regime for the FY 2024-25.