Income Tax Slabs FY 2025-26 (AY 2026-27): New Tax Regime & Old Regime Rates

Old Tax Regime Slabs For FY 2025-26 (AY 2026-27)

The old tax regime offers multiple tax saving deductions and exemptions but a higher tax rate. Taxpayers can opt for old tax regime if it is more beneficial. 

Key Features of the Old Tax Regime:

• The old tax regime offers higher basic exemption limit of Rs. 3 lakh for senior citizens and Rs. 5 lakh for super senior citizens.
• Standard deduction of Rs. 50,000 is allowed for salaried individuals.
• The old tax regime offers various tax saving deductions and exemptions. 
• Income up to Rs. 5 lakh is tax-free due to Section 87A rebate. 

Income Tax Calculator For FY 2025-26 (AY 2026-27)

Use the below tax calculator and know which is the best tax regime for you to save tax.

Income Tax Slabs for Senior Citizens and Super Senior Citizens

1. Income Tax Slabs For Senior Citizens (Aged 60 to 80)

The old tax regime offers a higher basic exemption limit to resident senior citizens.

However, the new tax regime slab rate remains the same.

2. Income Tax Slabs For Super Senior Citizens (Aged 80+ years)

For resident taxpayers aged above 80 years the basic exemption limit under the old tax regime is Rs. 5 lakh.

The new tax regime slabs remain the same with no such higher basic exemption limits. 

Section 87A Rebate & Standard Deduction: Who Pays Zero Tax?

Section 87A of the Income Tax Act offers a tax rebate to reduce the final tax liability to zero if your taxable income falls under the specified income limit. However, tax rebate is not a deduction, rather applies after your tax liability is calculated.

1. Rebate Under Section 87A

• The new tax regime offers a tax rebate of up to Rs. 60,000 thus effectively making taxable income up to Rs. 12 lakh tax-free. 
• The old tax regime offers a tax rebate of Rs. 12,500 making taxable income up to Rs. 5 lakh tax-free. 
• Rebate is not allowed for incomes taxed at special rates such as capital gains under Section 111A and 112A. 

2. Standard Deduction

A flat standard deduction is available to salaried taxpayers and pensioners under the head “Income From Salary”. For FY 2025-26, the standard deduction under

• New tax regime is Rs. 75,000 and 
• Old tax regime is Rs. 50,000. 

3. Example

Mr. X earns a salary income of Rs. 11.75 lakh in FY 2025-26 and opts for the new tax regime. After the standard deduction of Rs. 75,000 his taxable income will be Rs. 11 lakh. Here’s how Section 87A rebate works:

Since, Section 87A offers a tax rebate up to Rs. 60,000 and Mr. X’s tax liability was Rs. 50,000, he is eligible for a tax rebate. Thus, bringing his net tax liability to Zero and saving Rs. 50,000 in taxes. 

Marginal Relief Under New Income Tax Regime

Marginal relief under the new income tax regime ensures that taxpayers whose income slightly exceeds the rebate limit do not pay disproportionately higher tax. Under the new regime, individuals with taxable income up to Rs. 12 lakh are eligible for a full rebate under Section 87A, resulting in zero tax liability.

If income exceeds Rs. 12 lakh, marginal relief ensures that the additional tax payable is not more than the income exceeding Rs. 12 lakh. This prevents a sudden increase in tax liability when income crosses the rebate threshold.

Example of Marginal Relief Calculation

In this example, although the calculated tax is higher, marginal relief restricts the tax payable to Rs. 10,000, which is equal to the additional income above Rs. 12 lakh.

Surcharge & Cess Rates

Surcharge is an additional tax that is applicable only if your total income exceeds certain threshold limits. The surcharge rates are as follows:

All taxpayers pay a 4% health & education cess on their tax liability irrespective of their income limit. 

Old v/s New Tax Regime - Which is Better For FY 2025-26?

Which tax regime is better depends on the deductions and exemptions that are allowed to the taxpayer. The new tax regime offers a lower tax slab rate but disallows most of the deductions. However, the old tax regime has higher tax slab rates but lets you reduce the taxable income through significant deductions and exemptions.

Key Differences Between Old and New Tax Regime

For most taxpayers, the new tax regime results in lower tax liability, especially if they do not claim large deductions. With the rebate available under Section 87A, individuals with taxable income up to Rs. 12 lakh pay zero tax under the new regime. However, taxpayers claiming significant deductions under provisions like Section 80C or housing loan benefits may still find the old regime beneficial.

Therefore, choose the old tax regime when you have significant deductions and exemptions to claim. Else, choose the new tax regime.

How Much Tax Will You Pay? Salary-wise Breakdown

The following comparison shows how much tax you pay under the new vs old tax regime at different income levels and the potential savings available.

Under the new tax regime, taxpayers with taxable income up to Rs. 12 lakh pay zero tax due to the rebate available under Section 87A. For higher income levels, the new regime generally results in significantly lower tax liability compared to the old regime if the taxpayer does not claim major deductions.

How to Calculate Income Tax For FY 2025-26?

Income tax is calculated by reducing the deductions and exemptions from the gross total income, applying slab rates, and adjusting rebates, cess and prepaid taxes. Follow these steps to calculate income tax liability under the Income Tax Act:

Step 1: Calculate Gross Total Income by adding salary, house property, business or profession, other sources and capital gains.

Step 2: Reduce eligible deductions or exemptions based on the regime chosen

Step 3: Compute the taxable income.

Step 4: Apply slab rates and compute tax as per the chosen regime.

Step 5: Apply and claim rebate if eligible.

Step 6: Add cess at 4% (and surcharge, if applicable) on tax computed in Step 4.

Step 7: Reduce TDS, TCS, or advance tax already paid to find net payable or refund.

Income Tax Calculation Example

Example 1

Mr. Raj has a salary income of Rs. 15 lakhs. His taxable income and tax liability for FY 2025-26 (AY 2026-27) will be computed as follows under the new tax regime to save taxes:

The tax liability of Mr. Raj will be calculated as follows:

Therefore, the tax liability of Mr. Raj for FY 2025-26 (AY 2026-27) under the new tax regime is Rs. 97,500.

Example 2

Mr. Anban for FY 2025-26 has the following incomes, exemptions and deductions.

• Salary - Rs. 25 lakh
• HRA Exemption Rs. 4 lakh
• 80C Deduction - Rs. 1.5 lakh
• 80D Deduction - Rs. 25,000

His taxable income and tax liability for FY 2025-26 (AY 2026-27) will be computed as follows:

Mr. Anban's Tax Liability will be calculated as follows:

1. Under New Tax Regime

2. Under Old Tax Regime

Therefore, tax liability of Mr. Anban for FY 2025-26 (AY 2026-27) is as follows:

Therefore, by opting for New Tax Regime he can save Rs. 70,200 in taxes. However, many deductions & exemptions are not allowed under the new tax regime. 

Income Tax Slabs Comparison For FY 2023-24, FY 2024-25 & FY 2025-26

The old tax regime slabs have remained unchanged over the years. However, there have been significant changes in the new tax regime slabs. The following new tax regime changes were made:

Key Changes in Income Tax Slabs

• FY 2023-24 restructured the slabs and increased the basic exemption limit from Rs. 2.5 lakh to Rs. 3 lakh.
• Slabs were restructured again in FY 2025-26 and the basic exemption limit was increased to Rs. 4 lakh from Rs. 3 lakh.
• The tax-free limit was increased to Rs. 12 lakh in FY 2025-26 from Rs. 7 lakh in Rs. 2024-25 due to increase in Section 87A rebate limit. 

Budget 2026 Impact: Income Tax Slabs For FY 2026-27

As proposed in Budget 2026, there are no changes to the tax slabs for FY 2026-27. This means that the existing tax slabs and rates will be applicable as it is under both the new and old tax regime. Taxpayers continue to enjoy the same basic exemption limits of 

• Rs. 4 lakh under new tax regime
• Rs. 2.5 lakh old tax regime

The new tax regime under Section 115BAC continues to be the default tax regime. 

Special Income Tax Rates

The Income Tax Act taxes certain incomes at a special flat rate instead of the normal slab rates. These incomes include Short-term capital gains under Section 111A, Long-term capital gains, Lottery or game show winnings and gains from virtual digital assets. 

Income Tax Slabs For Women, NRIs, and HUFs

1. Income Tax Slabs For Women

The income tax slabs for women remain the same at the existing rates under both the old and new tax regime. The Income Tax Act does not offer different tax slabs and rates for women. 

2. Income Tax Slabs For NRIs

NRIs also can choose between the old and new tax regime. The tax slabs for NRIs are the same with a basic exemption limit of Rs. 4 lakh under the new tax regime and a basic exemption limit of Rs. 2.5 lakh under the old tax regime. 

However, NRIs do not enjoy basic exemption limit relaxation for senior & super senior citizens under the old tax regime, as it is only available for resident taxpayers. 

3. Income Tax Slabs For HUF

The new tax regime is the default tax regime for HUFs and the tax slabs remain the same with a basic exemption limit up to Rs. 4 lakh. HUFs also have the option to opt for the old tax regime with a basic exemption limit of Rs. 2.5 lakh.

How to File ITR For FY 2025-26?

After determining the tax payable or refund due, the next step is filing the Income Tax Return. It is important to choose the right ITR form and understand how to file ITR correctly. Taxpayers should file their ITRs before the specified due dates to avoid late fees and interest. The due date to file ITR for FY 2025-26 (AY 2026-27) is 31st July 2026.