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.
⚠ Note: The 87A rebate under the new regime does not apply to income taxed at special rates, such as short-term capital gains under Section 111A or long-term capital gains under Section 112A — these are taxed regardless of the rebate. See our
capital gains taxation guide for details.
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.
Frequently Asked Questions
Is the new tax regime compulsory for FY 2025-26? ▼
No, but it is the default. If you do not specifically opt for the old regime when filing your ITR (or by informing your employer at the start of the year for TDS purposes), the new regime under Section 115BAC applies automatically. Salaried individuals can switch between regimes each year; those with business or professional income have more restricted switching options.
Does the ₹12 lakh tax-free limit mean I pay zero tax up to ₹12 lakh income? ▼
Under the new regime, if your total taxable income is up to ₹12,00,000, the Section 87A rebate reduces your tax liability to nil (up to a rebate of ₹60,000). However, this applies to income taxed at normal slab rates — income such as short-term or long-term capital gains taxed at special rates under Sections 111A/112A is taxed separately and is not covered by this rebate.
Are the old regime slabs the same for everyone regardless of age? ▼
No. The old regime has three age-based slab structures: below 60 years, 60–80 years (senior citizens), and above 80 years (super senior citizens), with progressively higher basic exemption limits for older taxpayers. The new regime, by contrast, applies the same slabs to all age groups.