Income Tax Slabs FY 2025-26 (AY 2026-27): New Tax Regime vs Old Regime Rates Explained

15^th Dec 2025...

Published By : Team 811

Tax Regime Slabs Key Takeaways

New tax regime is default for FY 2025-26 with higher basic exemption and smoother slabs.
Under the new regime, salaried income up to ₹12 lakh is effectively tax-free.
New regime slabs range from 0% up to ₹4 lakh to 30% above ₹24 lakh.
Old tax regime slabs remain unchanged, allowing deductions like HRA, 80C, 80D, and home loan interest.
Standard deduction differs by regime, ₹75,000 under new and ₹50,000 under old.
Choice depends on deductions claimed, with new regime favoring modest investments and old rewarding higher deductions.

Income tax slabs for FY 2025-26 (AY 2026-27) put the new tax regime in clear focus, with relaxed slab rates, a higher rebate, and a bigger standard deduction making income up to ₹12 lakh effectively tax-free for most salaried individuals under the new regime. The old regime continues unchanged, still attractive for taxpayers who claim substantial deductions and exemptions such as HRA, 80C, 80D, and home loan benefits.

New Tax Regime Slabs FY 2025-26

Under the new regime, basic exemption has been increased, and rates have been smoothed, with more bands between 0% and 30%. For FY 2025-26, the default regime is the new regime, though individuals can still opt for the old regime at the time of filing ITR (with Form 10IEA in applicable business cases).

Key new regime slabs for FY 2025-26 (all individuals, including senior citizens) are:

Up to ₹4,00,000: 0%
₹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%

On top of this, the new regime offers a standard deduction of ₹75,000 for salaried individuals and a rebate under section 87A up to ₹60,000 for taxable income up to ₹12,00,000, effectively bringing tax liability to zero at that income level.

Old Tax Regime Slabs FY 2025-26

The old tax regime slabs remain exactly as in previous years, with different basic exemption limits for non-senior, senior (60–80 years) and super senior (80+ years) residents. Taxpayers opting for this regime can still claim a wide range of exemptions and deductions, including HRA, LTA, 80C, 80D, 80CCD(1B), home loan interest (self-occupied and let out), and more.

For individuals below 60 years, old regime slabs are:

Up to ₹2,50,000: 0%
₹2,50,001 – ₹5,00,000: 5%
₹5,00,001 – ₹10,00,000: 20%
Above ₹10,00,000: 30%

For resident senior citizens (60–80 years), basic exemption is ₹3,00,000; for super seniors (80+), exemption is ₹5,00,000, with higher bands taxed at 20% and 30% as in earlier years. A standard deduction of ₹50,000 continues in the old regime for salaried taxpayers, and rebate under section 87A up to ₹12,500 still applies for income up to ₹5,00,000.

New vs Old Regime: Slab Comparison

At a headline level, the new regime raises the nil-tax threshold and introduces a 25% slab at ₹20–24 lakh, while the old regime keeps a flatter 5–20–30 structure. The new structure is designed to reduce the number of people needing heavy tax planning, whereas the old regime still rewards those with large eligible investments and expenses.https://cleartax.in/s/income-tax-slabs

Some key differences:

Basic exemption: Old regime up to ₹2.5–5 lakh (depending on age) vs new regime ₹4 lakh for all.
Top slab entry: Old regime 30% above ₹10 lakh vs new regime 30% above ₹24 lakh.
Standard deduction: Old regime ₹50,000 vs new regime ₹75,000 (salaried).
Rebate: Old regime max ₹12,500 (up to ₹5 lakh) vs new regime max ₹60,000 (up to ₹12 lakh).

For many middle-income earners with limited deductions, the new regime now gives lower tax outgo for incomes between roughly ₹11–25 lakh, while heavily invested taxpayers (significant HRA, 80C, 80D, housing interest) may still find the old regime more efficient at higher income levels like ₹20–25 lakh.

How to Choose between New and Old Regime

The decision hinges on how much you claim as deductions and exemptions in the old regime. Clear analysis in the attached document shows “break-even” deduction levels at each income point—if your total deductions exceed that level, the old regime is better; if not, new regime wins.

Indicative break-even deduction thresholds under the old regime (approximate):

At ₹7 lakh income: ~₹1.5 lakh deductions
At ₹10 lakh income: ~₹4.5 lakh deductions
At ₹15 lakh income: ~₹5.4 lakh deductions
At ₹20 lakh income: ~₹7.1 lakh deductions
At ₹25 lakh income: ~₹8 lakh deductions

Taxpayers with modest investments (EPF, some 80C, limited home loan) will often pay less under the new regime, especially after factoring in the higher standard deduction and expanded rebate. Those with large 80C, 80D, NPS, HRA, and housing interest benefits may still prefer the old regime—especially at higher incomes where they can reduce taxable income substantially.

Surcharge, Cess and Overall Tax Impact

Surcharge and cess rules continue to apply over and above slab rates in both regimes, but the new regime caps surcharge at 25% even for very high incomes, versus 37% possible under the old regime. Health and education cess at 4% is uniform across regimes, levied on tax plus surcharge.

The attached slab analysis highlights that taxpayers at the same taxable income level (after deductions) generally pay less tax under the new regime for FY 2025-26 than they did in old vs new tax regime FY 2024-25, due purely to slab relaxation. For example, taxable income of ₹12 lakh now saves over ₹80,000 in tax compared to last year, entirely due to the new regime changes, even without extra deductions.

Practical Tips for FY 2025-26 Filing

Because the new regime is now the default, salaried individuals can decide regime at the time of ITR filing each year, while business/professional taxpayers must exercise the option more carefully using Form 10IEA and have limited switching flexibility. In practice, it helps to run both calculations—old vs new—based on your actual investments and allowances before choosing the regime for FY 2025-26.

Salaried taxpayers should also ensure that their CTC structure makes optimal use of the higher standard deduction and any permitted allowances under the chosen regime. For those with no or low deductions, the new regime’s slab structure, higher rebate, and lower compliance burden make it a natural choice for AY 2026-27.

Frequently Asked Questions related to New Tax Regime vs Old Regime Rates

1. What are the income tax slabs for FY 2025-26 under the new tax regime?
Under the new regime, income up to ₹4 lakh is tax-free; ₹4–8 lakh is taxed at 5%; ₹8–12 lakh at 10%; ₹12–16 lakh at 15%; ₹16–20 lakh at 20%; ₹20–24 lakh at 25%; and above ₹24 lakh at 30%.

2. What are the income tax slabs under the old tax regime for FY 2025-26?
For individuals below 60 years, old regime slabs remain: up to ₹2.5 lakh nil, ₹2.5–5 lakh at 5%, ₹5–10 lakh at 20%, and above ₹10 lakh at 30%, with higher basic exemption for senior and super senior citizens.

3. Is the new tax regime mandatory for FY 2025-26?
The new tax regime is the default regime from FY 2025-26, but individual taxpayers can still opt for the old regime while filing ITR if it is more beneficial for them.

4. How much income is tax-free under the new tax regime for FY 2025-26?
Due to a basic exemption of ₹4 lakh, a standard deduction of ₹75,000 for salaried individuals, and a rebate up to ₹60,000 under section 87A, income up to ₹12 lakh is effectively tax-free under the new regime.

5. Can I claim deductions like 80C and HRA under the new tax regime?
The new tax regime allows only limited deductions; most popular deductions such as 80C, 80D and HRA are not available. These continue to be allowed under the old tax regime.

6. How do I decide between the new and old tax regime for FY 2025-26?
Compare tax liability under both regimes. If your total deductions and exemptions are high (for example, 80C, 80D, NPS, home loan interest, HRA), the old regime may still reduce tax; otherwise, the relaxed new regime slabs usually work better.

7. Are there separate income tax slabs for senior citizens under the new tax regime?
No, the new tax regime has the same slab rates for all individuals regardless of age. Separate higher basic exemption limits for seniors and super seniors are available only under the old regime.

8. What is the standard deduction in FY 2025-26 under the new and old regimes?
The standard deduction is ₹75,000 for salaried individuals under the new tax regime, while the old regime continues to offer a standard deduction of ₹50,000.

9. What is the rebate under section 87A for FY 2025-26?
In the new regime, a rebate up to ₹60,000 is available for resident individuals with income up to ₹12 lakh, bringing tax to zero. In the old regime, the rebate is up to ₹12,500 for income up to ₹5 lakh.

10. Do surcharge and cess differ between the new and old tax regimes?
Health and education cess at 4% applies in both regimes, but surcharge rates differ at very high incomes, with the new regime capping surcharge at a lower level than the old regime in certain brackets.