Income Tax Slabs FY 2025-26 and 2026-27 — New Regime vs Old Regime Rates, the ₹12 Lakh Rebate and Marginal Relief, Standard Deduction, Surcharge and Cess, What Each Regime Lets You Deduct, and a Worked Comparison to Pick the Cheaper One
Video Explanation & Insights
Old vs new tax regime: which is better for you?
5 videos on this topic
New regime slabs — the default
The new regime under section 115BAC is the default for everyone since FY 2023-24. For FY 2025-26 (returns filed in 2026) the Finance Act 2025 widened the slabs and raised the rebate, and the Income-tax Act 2025, which applies from the tax year beginning 1 April 2026, carries the same rates — the Finance Act 2026 did not change them.
| Total income (after standard deduction) | 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% |
- •Rebate under section 87A: up to ₹60,000 for residents with total income up to ₹12 lakh — so a salaried person earning ₹12.75 lakh (₹75,000 standard deduction) pays nothing. Marginal relief applies just above ₹12 lakh: tax cannot exceed the income above ₹12 lakh. The rebate does not cover income taxed at special rates (short-term gains under 111A, long-term gains under 112A).
- •Deductions still available: standard deduction ₹75,000 on salary/pension, employer's NPS contribution under 80CCD(2) up to 14% of salary, family pension deduction up to ₹25,000, interest on a let-out property's loan (against rental income), Agniveer corpus 80CCH, transport allowance for the disabled, and business deductions under the normal computation.
- •Not available: 80C, 80D, 80G, HRA, LTA, home-loan interest on a self-occupied house (section 24(b)), the professional-tax deduction and most chapter VI-A deductions.
- •Same slabs for all ages — no higher basic exemption for senior citizens in the new regime.
Old regime slabs — opt in if deductions are large
| Total income | Below 60 | 60 to 79 | 80 and above |
|---|---|---|---|
| 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% |
- •Rebate under 87A: ₹12,500 for total income up to ₹5 lakh.
- •Deductions: standard deduction ₹50,000, HRA under 10(13A), LTA, 80C up to ₹1.5 lakh (PF, PPF, ELSS, life insurance, tuition fees, home-loan principal, 5-year FD, SSY), 80CCD(1B) ₹50,000 NPS, 80D health insurance (₹25,000 / ₹50,000 senior, plus parents), 24(b) home-loan interest up to ₹2 lakh on a self-occupied house, 80E education-loan interest, 80G donations, 80TTA/80TTB interest, 80U/80DD disability, professional tax.
- •Surcharge: 10% above ₹50 lakh, 15% above ₹1 crore, 25% above ₹2 crore, 37% above ₹5 crore (capped at 15% on dividends and capital gains); health and education cess 4% on tax plus surcharge in both regimes.
Worked comparison — salary of ₹15 lakh
| Item | New regime | Old regime (with ₹1.5 L 80C, ₹25,000 80D, ₹1.2 L HRA exempt, ₹2 L home-loan interest) |
|---|---|---|
| Gross salary | ₹15,00,000 | ₹15,00,000 |
| Standard deduction | ₹75,000 | ₹50,000 |
| HRA exemption / house-property loss | — | ₹1,20,000 + ₹2,00,000 |
| 80C + 80D | — | ₹1,75,000 |
| Taxable income | ₹14,25,000 | ₹9,55,000 |
| Tax before cess | ₹86,250 (5% of 4 L + 10% of 4 L + 15% of 2.25 L) | ₹1,03,500 (5% of 2.5 L + 20% of 4.55 L) |
| Cess 4% | ₹3,450 | ₹4,140 |
| Total tax | ₹89,700 | ₹1,07,640 |
Choosing and switching between regimes
- •Salaried and other non-business taxpayers choose every year in the return itself (ITR-1/ITR-2); tell the employer your choice for TDS, but the return's choice prevails.
- •Taxpayers with business or professional income opt out of the new regime by filing Form 10-IEA before the return due date; they can return to the new regime only once in their lifetime after opting out.
- •The choice must be made in a return filed within the due date under section 139(1) to claim the old regime; a belated return is assessed under the new regime.
- •Presumptive taxpayers (44AD/44ADA) can use either regime; the presumptive rates (6%/8%, 50%) are unchanged and the turnover limits are ₹3 crore and ₹75 lakh when cash receipts are within 5%.
- •Capital gains, dividends and interest are taxed identically in both regimes; the regime affects only the slab tax and the deductions.
Tax slabs and regimes: questions we are asked
Yes for residents under the new regime, through the section 87A rebate; ₹12.75 lakh for salary because of the ₹75,000 standard deduction. Special-rate income such as share gains does not get the rebate.
No. Marginal relief limits the tax to the income above ₹12 lakh, so at ₹12.5 lakh the tax is ₹50,000 at most, not the ₹67,500 the slabs would give.
No — the new regime has the same ₹4 lakh nil slab for all ages; the ₹3 lakh / ₹5 lakh limits exist only in the old regime.
No. The Act, in force from 1 April 2026, restates the same rates; the Finance Act 2026 left them unchanged. Section numbers change, the rates do not.
Yes, once — file the return without Form 10-IEA to return to the new regime; after that you cannot opt out again while you have business income.
Yes — for every return we prepare, with the break-even worked out and the employer's TDS declaration aligned.