Income Tax Slabs 2025-26 (AY 2026-27): Complete Guide

Income Tax Slabs 2025-26 (AY 2026-27): Complete Guide

The Union Budget 2025 brought some of the **biggest changes in India’s personal taxation** in recent years. If you are a salaried employee, professional, or small business owner, understanding the **latest tax slabs** is essential for planning your finances wisely.

This guide covers:

✅ New tax regime slabs (default system)

✅ Rebate, deductions & exemptions

✅ Key comparison with the old regime

✅ Who benefits the most in FY 2025-26

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## 1. New Income Tax Regime (Default from FY 2025-26)

The **new regime is now the default**, but taxpayers can still opt for the old regime if it suits them better.

 Slabs under New Regime (FY 2025-26 / AY 2026-27)

| **Annual Income (₹)** | **Tax Rate** |

| --------------------- | ------------ |

| 0 – 4,00,000 | Nil (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% |

👉 The **basic exemption limit** has been raised from ₹3 lakh to ₹4 lakh.

👉 The **30% highest slab** now starts only after ₹24 lakh (earlier it applied at much lower level

 2. Rebate & Standard Deduction

* **Rebate under Section 87A**: Taxpayers with taxable income up to **₹12,00,000** will pay **zero tax** under the new regime.

* **Standard Deduction for Salaried/ Pensioners**: Still available at **₹75,000**, which pushes the effective **tax-free limit to ₹12.75 lakh**.

💡 This means a **salaried individual earning ₹12.75 lakh pays no income tax** under the new regime.

 3. Old Regime (Optional)

The **old tax regime** with exemptions (HRA, 80C, 80D, etc.) is still available.

**Old Regime Slabs (FY 2025-26)**

* ₹0 – 2.5 lakh → Nil

* ₹2.5 – 5 lakh → 5%

* ₹5 – 10 lakh → 20%

* Above ₹10 lakh → 30%

(Senior citizens have slightly higher exemption limits.)

👉 Old regime may still benefit those who claim **heavy deductions** like home loan interest, large 80C investments, or HRA.

4. Who Benefits the Most?

* **Middle-class taxpayers**: Income up to ₹12 lakh → **Zero tax liability**.

* **Salaried individuals**: Extra relief due to standard deduction.

* **High earners**: Smoother tax curve, as the top 30% slab starts later.

* **Low deduction claimers**: New regime is simpler and more rewarding.

5. Quick Example

Suppose **Ravi** earns ₹10 lakh salary (no major deductions):

Old Regime  → Taxable income after deductions may still leave him with \~₹75,000 tax.

* **New Regime** → Entire tax liability becomes **zero** (due to rebate).

Clearly, the **new regime is more attractive for most salaried individuals**.

 6. Final Thoughts

The government has made the **new regime attractive by default**, offering:

✅ Simplicity

✅ Higher exemption (₹4 lakh)

✅ Full rebate up to ₹12 lakh (₹12.75 lakh for salaried)

If you don’t claim large exemptions, the new regime is your best choice  for FY 2025-26. But if you have significant deductions (housing loan, ELSS, NPS, medical insurance, etc.), do compare both regimes before filing your return.

✍️ This post is written for taxpayers looking for a simple breakdown of the latest slabs. Keep checking back for budget updates, tax-saving tips, and calculators!