Income Tax Slab Rates for FY 2025-26 (AY 2026-27)
Understanding income tax slab rates is very important for proper tax planning and filing your Income Tax Return (ITR). In India, taxpayers can choose between:
New Tax Regime
Old Tax Regime
The New Tax Regime continues as the default tax regime for FY 2025-26. However, taxpayers can still opt for the Old Tax Regime if it is more beneficial.
In this article, we will explain the latest income tax slab rates for FY 2025-26 in simple language.
New Tax Regime Slab Rates for FY 2025-26
The government revised the income tax slabs under the New Tax Regime for FY 2025-26.
| Annual Income | Tax Rate |
|---|---|
| Up to ₹4,00,000 | NIL |
| ₹4,00,001 – ₹8,00,000 | 5% |
| ₹8,00,001 – ₹12,00,000 | 10% |
| ₹12,00,001 – ₹16,00,000 | 15% |
| ₹16,00,001 – ₹20,00,000 | 20% |
| ₹20,00,001 – ₹24,00,000 | 25% |
| Above ₹24,00,000 | 30% |
Old Tax Regime Slab Rates for FY 2025-26
The old tax regime slab rates remain unchanged.
For Individuals Below 60 Years
| Annual Income | Tax Rate |
|---|---|
| Up to ₹2,50,000 | NIL |
| ₹2,50,001 – ₹5,00,000 | 5% |
| ₹5,00,001 – ₹10,00,000 | 20% |
| Above ₹10,00,000 | 30% |
Income Tax Slab for Senior Citizens (60 to 80 Years)
| Annual Income | Tax Rate |
|---|---|
| Up to ₹3,00,000 | NIL |
| ₹3,00,001 – ₹5,00,000 | 5% |
| ₹5,00,001 – ₹10,00,000 | 20% |
| Above ₹10,00,000 | 30% |
Income Tax Slab for Super Senior Citizens (Above 80 Years)
| Annual Income | Tax Rate |
|---|---|
| Up to ₹5,00,000 | NIL |
| ₹5,00,001 – ₹10,00,000 | 20% |
| Above ₹10,00,000 | 30% |
Standard Deduction for FY 2025-26
| Tax Regime | Standard Deduction |
|---|---|
| New Tax Regime | ₹75,000 |
| Old Tax Regime | ₹50,000 |
Rebate Under Section 87A
Under the New Tax Regime, taxpayers can get rebate benefits resulting in zero tax liability up to ₹12 lakh taxable income.
For salaried employees, due to standard deduction of ₹75,000, salary income up to approximately ₹12.75 lakh may become tax-free under the New Regime.
Example of Tax Calculation Under New Regime
Suppose your taxable income is ₹10 lakh.
Then tax calculation will be:
Up to ₹4 lakh → NIL
₹4 lakh to ₹8 lakh → 5%
₹8 lakh to ₹10 lakh → 10%
Tax=5%×4,00,000+10%×2,00,000\text{Tax} = 5\% \times 4,00,000 + 10\% \times 2,00,000Tax=5%×4,00,000+10%×2,00,000
Old vs New Tax Regime – Which is Better?
Choose New Tax Regime If:
You do not claim many deductions
You prefer simple tax filing
Your investments under 80C are low
You want lower tax rates
Choose Old Tax Regime If:
You claim deductions such as:
Section 80C investments
HRA exemption
Home loan interest
Medical insurance under 80D
Education loan deduction
Important Deductions Available in Old Regime
| Section | Deduction |
|---|---|
| 80C | Up to ₹1.5 lakh |
| 80D | Medical insurance |
| 24(b) | Home loan interest |
| HRA | House Rent Allowance |
| 80E | Education loan interest |
Health & Education Cess
An additional 4% Health and Education Cess is applicable on total income tax payable under both tax regimes.
Surcharge Rates
Surcharge applies on higher income levels:
| Income | Surcharge |
|---|---|
| Above ₹50 lakh | Applicable |
| Above ₹1 crore | Higher surcharge |
Key Points to Remember
New Tax Regime is default from FY 2025-26
Taxpayers can still choose Old Regime
Choice of regime depends on deductions and exemptions
Proper tax planning can help reduce tax liability legally
Frequently Asked Questions (FAQs)
Which tax regime is better for salaried employees?
It depends on deductions claimed. Employees with high deductions may benefit from Old Regime, while others may prefer New Regime.
Is income up to ₹12 lakh tax-free?
Under the New Tax Regime, rebate under Section 87A can make tax liability zero up to ₹12 lakh taxable income.
Can I switch between tax regimes every year?
Salaried individuals can generally choose between regimes every financial year.
Is standard deduction available in New Regime?
Yes, ₹75,000 standard deduction is available under the New Tax Regime.
Conclusion
The income tax slab rates for FY 2025-26 offer taxpayers flexibility between the Old and New Tax Regimes. The New Regime provides lower tax rates and simplified compliance, while the Old Regime continues to offer multiple deductions and exemptions.
Before filing your ITR, compare both tax regimes carefully to choose the most beneficial option and reduce your tax liability legally.
