Income Tax Slabs FY 2025-26 (AY 2026-27): New vs Old Regime
Confused about which numbers apply to your salary this year? Here are the exact income tax slabs for FY 2025-26 (AY 2026-27) as revised in Budget 2025 — for both the New Regime and the Old Regime, across all age groups. We've also worked through the Section 87A rebate with real numbers, so you can see exactly why income up to ₹12 lakh can mean zero tax under the new regime, and when the old regime is still worth choosing.
New Tax Regime Slabs — FY 2025-26 (AY 2026-27)
The New Tax Regime applies the same slab rates to every taxpayer regardless of age. It is the default regime — if you don't specifically opt for the old regime, this is what applies.
| Taxable Income | Tax Rate |
|---|---|
| ₹0 – ₹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% |
Standard deduction under the new regime for salaried and pensioners is ₹75,000.
Old Tax Regime Slabs — All Age Groups
The Old Tax Regime keeps its long-standing slab structure, but the exemption limit changes with the taxpayer's age.
| Age Group | Nil Slab | 5% | 20% | 30% |
|---|---|---|---|---|
| Below 60 years | Up to ₹2,50,000 | ₹2,50,001 – ₹5,00,000 | ₹5,00,001 – ₹10,00,000 | Above ₹10,00,000 |
| Senior citizen (60–80 years) | Up to ₹3,00,000 | ₹3,00,001 – ₹5,00,000 | ₹5,00,001 – ₹10,00,000 | Above ₹10,00,000 |
| Super senior citizen (80+ years) | Up to ₹5,00,000 | — | ₹5,00,001 – ₹10,00,000 | Above ₹10,00,000 |
Standard deduction under the old regime for salaried and pensioners is ₹50,000. Unlike the new regime, the old regime also allows deductions such as Section 80C, 80D, HRA exemption and home loan interest under Section 24(b).
Section 87A Rebate — How Income Up To ₹12 Lakh Becomes Tax-Free
The Section 87A rebate reduces your tax liability to nil if your taxable income stays within a set limit. It works very differently between the two regimes:
- New Regime: Rebate of up to ₹60,000 if taxable income is up to ₹12,00,000.
- Old Regime: Rebate of up to ₹12,500 if taxable income is up to ₹5,00,000.
Example: ₹12 lakh taxable income under the New Regime
Tax on ₹12,00,000 taxable income works out as: nil on the first ₹4,00,000; 5% on the next ₹4,00,000 = ₹20,000; and 10% on the next ₹4,00,000 = ₹40,000. That totals exactly ₹60,000 — which is fully wiped out by the ₹60,000 87A rebate. Final tax payable: ₹0. For a salaried employee, adding the ₹75,000 standard deduction means a gross salary of up to ₹12,75,000 can result in zero tax.
Marginal relief just above the ₹12 lakh limit
If your taxable income is only slightly above ₹12,00,000, you don't fall off a cliff. Marginal relief ensures your tax never exceeds the amount by which your income crosses ₹12,00,000. For example, at ₹12,10,000 taxable income, the slab-wise tax works out to ₹61,500 (before rebate) — but since income exceeds ₹12 lakh by only ₹10,000, marginal relief caps the tax at ₹10,000 (plus cess), instead of the full ₹61,500.
Health & Education Cess
A 4% Health and Education Cess is added on top of the income tax computed (after rebate, where applicable) under both regimes. This cess funds public health and education initiatives and is non-negotiable — it applies uniformly regardless of income level or regime chosen.
When the Old Regime Can Still Save More Tax
The new regime's wider slabs and larger rebate make it the better choice for most people. But the old regime can still win if you have substantial deductions stacked together:
| Deduction | Typical Amount |
|---|---|
| Section 80C (PPF, ELSS, LIC, EPF) | Up to ₹1,50,000 |
| Section 80D (health insurance premium) | Up to ₹75,000 |
| Home Loan Interest — Section 24(b) | Up to ₹2,00,000 |
| HRA Exemption | Varies by rent & city |
As a rule of thumb: if your total eligible deductions cross roughly ₹4–5 lakh — typically a combination of home loan interest, full 80C, 80D and a meaningful HRA claim — it is worth computing both regimes before you file. Below that level, the new regime almost always comes out ahead given the revised slabs and higher rebate ceiling.
Not sure which regime saves you more? Run your exact numbers through our free calculator before you file.
Compare Old vs New Regime →Frequently asked questions
What is the income tax slab for FY 2025-26 under the new regime?
Under the new regime for FY 2025-26 (AY 2026-27): nil up to ₹4 lakh, 5% from ₹4-8 lakh, 10% from ₹8-12 lakh, 15% from ₹12-16 lakh, 20% from ₹16-20 lakh, 25% from ₹20-24 lakh, and 30% above ₹24 lakh. A 4% health and education cess applies on the tax computed.
Is income up to ₹12 lakh really tax-free in FY 2025-26?
Yes, under the new regime, if your taxable income is up to ₹12,00,000, the Section 87A rebate (up to ₹60,000) brings your tax liability down to zero. For a salaried person, the ₹75,000 standard deduction means a gross salary up to ₹12,75,000 can result in nil tax.
Should I choose the old regime or new regime for FY 2025-26?
The new regime works better for most taxpayers with income up to ₹15-16 lakh and average deductions. The old regime can still save more tax if you claim large deductions together, such as home loan interest, full Section 80C, 80D, and HRA, typically totalling more than ₹4-5 lakh.
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