Income Tax Slabs for FY 2025-26 (AY 2026-27): New Regime vs Old Regime
Reviewed by CA Nikhil Gupta · Last reviewed 16 June 2026
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:
For related guidance and tools, visit the Income Tax and Salary Hub.
| 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.
For the connected rule or filing step, see Old vs New Tax Regime Calculator — AY 2026–27.
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.
AY 2026–27 slabs — rebate and special-rate income caveat
Decision table
| Situation | 2026 treatment / control | Why it matters |
|---|---|---|
| Normal-rate income under new regime | Use AY 2026–27 slab table and section 87A conditions. | Marginal relief may apply just above rebate threshold. |
| Special-rate income | Compute under its special provision; do not assume 87A wipes it out. | Examples include certain capital gains/VDA income. |
| Old regime | Old slab structure remains available subject to regime-choice rules. | Compare after deductions/exemptions actually available. |
| Salaried taxpayer | Standard deduction affects gross salary level that can result in nil normal-rate tax. | Do not confuse gross salary with total income. |
Worked practical example
A salaried taxpayer has normal taxable income near ₹12 lakh and also has special-rate capital gains. The tax result cannot be described simply as “₹12 lakh tax-free”; compute normal and special-rate components separately and then apply rebate law.
Evidence checklist
- salary/other-income schedule
- deduction evidence
- capital-gains/special-income schedule
- regime choice
- tax computation
Primary-source checks: Income Tax Department — AY 2026–27 rates · Budget 2026 FAQ
Use this with the original article: this module tightens current-law, edge-case and evidence controls; it does not replace the article's existing explanation or your fact-specific professional review.
Frequently Asked Questions
Source and review trail
Use the current official instrument, portal or regulator publication before acting. This panel separates the category authority from page-specific references.
- Primary category
- Income Tax
- Official starting point
- www.incometax.gov.in