Income Tax Slabs for FY 2025-26 (AY 2026-27): New Regime vs Old Regime
Budget 2025 significantly revised the new tax regime slabs effective FY 2025-26 (AY 2026-27), raising the effective tax-free income to ₹12 lakh for most salaried taxpayers. Here's the complete slab breakdown for both regimes, and how to think about which one applies to you.
New Tax Regime Slabs for FY 2025-26 (AY 2026-27)
The new tax regime under Section 115BAC is the default regime unless you actively opt for the old regime while filing your return. Budget 2025 widened the slabs as follows:
| Annual Income Slab | 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% |
These slabs apply uniformly regardless of age — there is no separate senior citizen slab structure under the new regime.
Old Tax Regime Slabs (Unchanged)
The old regime slabs remain as they were, and continue to vary by age group:
| Annual Income Slab | Below 60 yrs | 60–80 yrs | Above 80 yrs |
|---|---|---|---|
| Up to ₹2,50,000 | Nil | Nil | Nil |
| ₹2,50,001 – ₹3,00,000 | 5% | Nil | Nil |
| ₹3,00,001 – ₹5,00,000 | 5% | 5% | Nil |
| ₹5,00,001 – ₹10,00,000 | 20% | 20% | 20% |
| Above ₹10,00,000 | 30% | 30% | 30% |
Section 87A Rebate: The Real Game-Changer
The slab table alone doesn't tell the full story — the Section 87A rebate determines who pays zero tax:
- New regime: Taxpayers with taxable income up to ₹12,00,000 get a rebate of up to ₹60,000, effectively making tax payable nil. Marginal relief applies just above this threshold so tax doesn't jump sharply.
- Old regime: Taxpayers with taxable income up to ₹5,00,000 get a rebate of up to ₹12,500, making tax payable nil.
Surcharge and Cess on Top of Slab Tax
Once tax is computed using the slabs above, a 4% Health and Education Cess is added on the tax amount (after rebate). Additionally, a surcharge applies if total income exceeds ₹50 lakh — 10% for income above ₹50 lakh, 15% above ₹1 crore, with further slabs at higher incomes (capped differently for the new regime, where the maximum surcharge is 25% instead of 37% under the old regime for the highest slab).
Which Regime Should You Choose?
The new regime generally works better if you claim few deductions (limited 80C, no home loan interest, no HRA claim). The old regime can still be beneficial if you have a high HRA exemption, home loan interest on a self-occupied property, and fully utilise 80C, 80D and other Chapter VI-A deductions. Read our detailed break-even analysis to find the crossover point based on your deductions.