Income Tax Slab Rates for FY 2025-26 (AY 2026-27)
For the financial year 2025-26 (assessment year 2026-27), the new tax regime is the default, and it is the year the government made it genuinely attractive for the middle class. The basic exemption limit rose to Rs. 4,00,000, and a taxable income up to Rs. 12,00,000 now attracts zero tax after the enhanced Section 87A rebate. A salaried person can earn up to Rs. 12,75,000 and still pay nothing, once the Rs. 75,000 standard deduction is applied. The old regime survives unchanged for those whose deductions are large enough to beat the new slabs.
This page gives you both regimes side by side, the surcharge and cess layers on top, three worked examples, and clear break-even guidance so you can pick correctly rather than by habit.
New Regime Slabs FY 2025-26 (Default)
The new regime under Section 115BAC is the default for FY 2025-26. If you do nothing, this is the regime your return is computed under. The slabs were widened in the Finance Act 2025 and now run in clean Rs. 4 lakh bands.
Tax Rate Chart
New Tax Regime Slabs, FY 2025-26 (AY 2026-27)
Default regime under Section 115BAC. Applies to all individuals and HUFs unless the old regime is opted for.
Up to Rs. 4,00,000
Basic exemption, raised from Rs. 3,00,000
Rs. 4,00,001 to Rs. 8,00,000
First taxable band
Rs. 8,00,001 to Rs. 12,00,000
Rebate still wipes tax out up to Rs. 12L
Rs. 12,00,001 to Rs. 16,00,000
Rebate no longer available above Rs. 12L
Rs. 16,00,001 to Rs. 20,00,000
Rs. 20,00,001 to Rs. 24,00,000
Above Rs. 24,00,000
Top marginal rate
Source: Finance Act 2025, Section 115BAC(1A)
Two structural facts define the new regime this year:
- Basic exemption is Rs. 4,00,000, up from Rs. 3,00,000, with effect from 1 April 2025. That first Rs. 4 lakh is tax-free for every taxpayer regardless of age; the new regime does not give extra exemption to senior or super-senior citizens.
- The Section 87A rebate now covers taxable income up to Rs. 12,00,000, with a maximum rebate of Rs. 60,000. This is why tax is effectively nil up to Rs. 12 lakh even though the slab math produces a positive figure. Read the mechanics in our Section 87A rebate guide.
Why the Rs. 12 Lakh Figure Matters
The slabs alone would tax a Rs. 12 lakh income at Rs. 60,000. The rebate then cancels exactly that amount, so your net liability is zero. Cross Rs. 12,00,000 and the full rebate is no longer available. Marginal relief under Section 87A softens the cliff: for income just over Rs. 12 lakh, tax (before cess) cannot exceed the income above Rs. 12 lakh, which matters up to about Rs. 12.7 lakh of taxable income, but the planning point is simple: keeping taxable income at or below Rs. 12,00,000 is worth real money.
Standard Deduction Lifts the Salaried Ceiling
Salaried taxpayers and pensioners get a Rs. 75,000 standard deduction under the new regime. That pushes the effective tax-free ceiling to Rs. 12,75,000 of gross salary, because the deduction brings taxable income back down to Rs. 12,00,000 where the rebate still applies. We cover this in detail in the Rs. 75,000 standard deduction guide.
Old Regime Slabs FY 2025-26 (Unchanged)
The old regime was left untouched this year. Its exemption limits and slab rates are the same as prior years, and it remains available to anyone who explicitly opts for it. Its appeal is that it keeps the full menu of deductions, which the new regime strips away.
| Taxable income | Below 60 years | 60 to 79 years | 80 years and above |
|---|---|---|---|
| Up to Rs. 2,50,000 | Nil | Nil | Nil |
| Rs. 2,50,001 to Rs. 3,00,000 | 5% | Nil | Nil |
| Rs. 3,00,001 to Rs. 5,00,000 | 5% | 5% | Nil |
| Rs. 5,00,001 to Rs. 10,00,000 | 20% | 20% | 20% |
| Above Rs. 10,00,000 | 30% | 30% | 30% |
Key old-regime facts for FY 2025-26:
- Section 87A rebate applies to taxable income up to Rs. 5,00,000, with a maximum rebate of Rs. 12,500. Above Rs. 5 lakh, tax is payable on the full slab basis.
- Standard deduction for the salaried and pensioners is Rs. 50,000, lower than the new regime's Rs. 75,000.
- Deductions are the whole point: the old regime lets you claim Section 80C up to Rs. 1,50,000, Section 80D health insurance, HRA under Section 10(13A), home loan interest under Section 24, and the rest of Chapter VI-A.
New vs Old Regime: Side by Side
The two systems differ on three axes: exemption limit, slab width, and what you can deduct. The new regime wins on headline rates; the old regime wins only if your deductions are large.
| Feature | New regime | Old regime |
|---|---|---|
| Basic exemption | Rs. 4,00,000 (all ages) | Rs. 2,50,000 / Rs. 3,00,000 (60+) / Rs. 5,00,000 (80+) |
| Top rate | 30% above Rs. 24 lakh | 30% above Rs. 10 lakh |
| Section 87A rebate | Up to Rs. 60,000, income up to Rs. 12 lakh | Up to Rs. 12,500, income up to Rs. 5 lakh |
| Standard deduction (salary/pension) | Rs. 75,000 | Rs. 50,000 |
| 80C, 80D, HRA, home loan interest (self-occupied) | Not allowed | Allowed |
| Maximum surcharge | 25% | 37% |
The new regime disallows most Chapter VI-A deductions. The ones that survive are 80CCD(2) (employer contribution to NPS, up to 14% of salary), 80CCH(2) (Agnipath scheme) and 80JJAA (deduction for additional employee cost). For a full walk-through of the trade-off, see old vs new tax regime, which is better for AY 2026-27.
Surcharge and Cess: The Layers on Top
Slab tax is not the final number. On higher incomes, a surcharge is added, and a health and education cess sits on top of tax plus surcharge in both regimes.
| Total income | Surcharge (new regime) | Surcharge (old regime) |
|---|---|---|
| Above Rs. 50 lakh to Rs. 1 crore | 10% | 10% |
| Above Rs. 1 crore to Rs. 2 crore | 15% | 15% |
| Above Rs. 2 crore to Rs. 5 crore | 25% | 25% |
| Above Rs. 5 crore | 25% (capped) | 37% |
Surcharge on tax on STCG under Section 111A, LTCG under Sections 112 and 112A, and dividend income is capped at 15%. Marginal relief applies at each surcharge threshold.
On top of tax plus surcharge, a Health and Education Cess of 4% applies in both regimes. So the true marginal cost of an extra rupee at the top is the slab rate, grossed up by any applicable surcharge, and then by 4% cess.
Worked Examples
The numbers below use gross salary, apply the standard deduction, then compute tax under the new regime (the default). Cess is added at 4%. Surcharge does not apply at these income levels.
Example 1: Salaried, Rs. 10,00,000 Gross
- Standard deduction: Rs. 75,000, so taxable income = Rs. 9,25,000.
- Slab tax: Rs. 4L to Rs. 8L at 5% = Rs. 20,000; Rs. 8L to Rs. 9.25L at 10% = Rs. 12,500. Total = Rs. 32,500.
- Since taxable income is below Rs. 12,00,000, the 87A rebate wipes out the entire Rs. 32,500.
- Tax payable: Nil.
A Rs. 10 lakh salaried earner pays zero tax under the new regime for FY 2025-26. Under the old regime, the same person would need Rs. 4.5 lakh of deductions on top of the Rs. 50,000 standard deduction to bring taxable income down to Rs. 5 lakh and pay nothing.
Example 2: Salaried, Rs. 15,00,000 Gross
- Standard deduction: Rs. 75,000, so taxable income = Rs. 14,25,000.
- Slab tax: Rs. 4L to Rs. 8L at 5% = Rs. 20,000; Rs. 8L to Rs. 12L at 10% = Rs. 40,000; Rs. 12L to Rs. 14.25L at 15% = Rs. 33,750. Total = Rs. 93,750.
- Taxable income exceeds Rs. 12,00,000, so no 87A rebate.
- Add 4% cess: Rs. 93,750 + Rs. 3,750 = Rs. 97,500.
This is the income band where the regime choice is closest. If this person has Rs. 1.5 lakh of 80C, Rs. 25,000 of 80D, and significant HRA or home loan interest, the old regime can pull ahead. Without those, the new regime is clearly cheaper.
Example 3: Rs. 25,00,000 Gross Salary
- Standard deduction: Rs. 75,000, so taxable income = Rs. 24,25,000.
- Slab tax: Rs. 4L to Rs. 8L at 5% = Rs. 20,000; Rs. 8L to Rs. 12L at 10% = Rs. 40,000; Rs. 12L to Rs. 16L at 15% = Rs. 60,000; Rs. 16L to Rs. 20L at 20% = Rs. 80,000; Rs. 20L to Rs. 24L at 25% = Rs. 1,00,000; Rs. 24L to Rs. 24.25L at 30% = Rs. 7,500. Total = Rs. 3,07,500.
- No 87A rebate. Surcharge does not apply below Rs. 50 lakh.
- Add 4% cess: Rs. 3,07,500 + Rs. 12,300 = Rs. 3,19,800.
At this income, the new regime almost always wins because matching it in the old regime would require deductions well beyond what most salaried taxpayers can genuinely claim.
Which Regime Should You Pick?
The decision reduces to one comparison: is your total deduction claim under the old regime large enough to make its higher slab rates cheaper than the new regime's lower ones?
Break-even guidance. As a rule of thumb for FY 2025-26, if your combined old-regime deductions (80C, 80D, HRA, home loan interest and NPS) are modest, the new regime wins comfortably at almost every income level. The old regime tends to win only when total deductions run into several lakhs, typically for taxpayers claiming full Rs. 1.5 lakh 80C, substantial HRA in a metro, and home loan interest near the Rs. 2 lakh cap together. Below that, the new regime's wider slabs and larger standard deduction and rebate carry the day.
Salaried taxpayers may choose the regime afresh each assessment year. Taxpayers with business or professional income who opt out of the new regime face restrictions on switching back, so that choice deserves more care.
Sources: Finance Act 2025 and the Income Tax Act 1961, specifically Section 115BAC (new regime slabs and default status), Section 87A (rebate limits), the standard deduction provisions under Section 16, and the surcharge and Health and Education Cess rules as notified by the Central Board of Direct Taxes for AY 2026-27. Figures verified against the rate schedule effective 1 April 2025. For a computation on your own numbers, consult a Chartered Accountant.
