Income Tax Slabs FY 2025‑26
For the financial year 2025‑26, the new tax regime offers zero tax on income up to 4 lakh. Income from 4 lakh to 8 lakh is taxed at 5 percent, 8 lakh to 12 lakh at 10 percent, 12 lakh to 16 lakh at 15 percent, 16 lakh to 20 lakh at 20 percent, 20 lakh to 24 lakh at 25 percent, and above 24 lakh at 30 percent. Individuals earning up to around 12 lakh can benefit from the enhanced rebate, reducing their tax liability to zero under this regime.
The old tax regime remains optional. For individuals below 60, income up to 2.5 lakh is tax-free, 2.5 lakh to 5 lakh is taxed at 5 percent, 5 lakh to 10 lakh at 20 percent, and above 10 lakh at 30 percent. Senior citizens and super-senior citizens enjoy higher exemption limits, up to 3 lakh or 5 lakh, but the rates above these limits stay the same.
Key Changes in FY 2025‑26
The government introduced new income tax slabs and enhanced rebates. Taxpayers can now save more under the new regime, and senior citizens get higher exemption limits under the old regime.
Highlights:
- Income up to 4 lakh is tax-free under the new regime.
- New slab rates start from 5 percent and go up to 30 percent.
- Enhanced rebate reduces tax liability for incomes up to 12 lakh.
- The old regime remains optional with unchanged rates.
- Senior citizens enjoy higher exemption limits up to 5 lakh.
The FY 2025‑26 changes make tax planning easier and more beneficial for all income groups.
Income Tax Slabs – New Regime
The new tax regime offers lower rates and more exemptions for taxpayers. It is simple and reduces the overall tax burden for middle and higher-income groups.
Slab Rates:
- Income up to 4 lakh: No tax
- 4 lakh to 8 lakh: 5 percent
- 8 lakh to 12 lakh: 10 percent
- 12 lakh to 16 lakh: 15 percent
- 16 lakh to 20 lakh: 20 percent
- 20 lakh to 24 lakh: 25 percent
- Above 24 lakh: 30 percent
The new regime helps taxpayers save more with simplified tax rates and rebates.
Income Tax Slabs – Old Regime
The old tax regime remains optional and offers higher exemption limits, especially for senior citizens. Taxpayers can choose this regime if they prefer standard deductions and exemptions.
Slab Rates:
- Income up to 2.5 lakh: No tax
- 2.5 lakh to 5 lakh: 5 percent
- 5 lakh to 10 lakh: 20 percent
- Above 10 lakh: 30 percent
Senior Citizens & Super-Seniors:
- Age 60–80: Up to 3 lakh tax-free
- Age above 80: Up to 5 lakh tax-free
The old regime benefits those who rely on deductions and higher exemptions for tax savings.
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Tax for Senior Citizens & Super Senior Citizens
Senior citizens get higher tax exemption limits under the old regime. Super senior citizens enjoy even greater relief, making tax planning easier for retirees.
Exemption Limits:
- Age 60–80: Income up to 3 lakh is tax-free
- Age above 80: Income up to 5 lakh is tax-free
- Above these limits, standard old-regime slab rates apply
Higher exemptions make the old regime beneficial for senior and super senior citizens.
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How to Calculate Your Tax Liability
Calculating tax liability is simple. First, determine your total income. Next, check which tax regime you choose: new or old. Apply the relevant slab rates, subtract eligible rebates, and add cess to get your final tax.
Steps to Calculate Tax:
- Add all income sources: salary, business, rental, and others
- Choose the tax regime: new or old
- Apply the respective slab rates
- Deduct rebates like section 87A (if applicable)
- Add health and education cess (4%)
Accurate calculation ensures you pay the correct tax and avoid penalties.
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Section 87A Rebate & Other Benefits
Section 87A offers tax relief to low and middle-income taxpayers. Under the new regime, individuals with taxable income up to 12 lakh can claim this rebate and reduce their tax liability to zero.
Key Benefits:
- Full rebate for taxable income up to 12 lakh
- Reduces tax payable under the new regime
- Available to individual taxpayers only
- Helps save on the overall tax burden
Section 87A rebate makes tax saving easier and supports low to middle-income earners.
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Old vs New Tax Regime – Which is Better?
Choosing between the old and new tax regimes depends on your income and deductions. The new regime offers lower slab rates and simple filing. The old regime benefits those who claim multiple exemptions and deductions.
Comparison Highlights:
- New Regime: Lower rates, fewer deductions, simpler calculation
- Old Regime: Higher exemptions, multiple deductions, useful for salaried individuals with investments
- Rebate Impact: Section 87A applies in both regimes where eligible
- Senior Citizens: The Old regime offers higher exemption limits
Pick the regime that maximizes your savings based on income and eligible deductions.
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Tips for Tax Planning in FY 2025‑26
Effective tax planning helps save money and avoid penalties. Choose the right tax regime, use deductions wisely, and plan investments to reduce taxable income.
Key Tips:
- Compare the old vs the new tax regime before filing
- Claim all eligible deductions and rebates
- Invest in tax-saving instruments like PPF, NPS, and ELSS
- Plan salary structure for exemptions and allowances
- Keep records for smooth filing and audit
Smart planning maximizes savings and ensures stress-free tax filing.
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Conclusion
The FY 2025‑26 tax changes provide flexibility and opportunities for savings. The new tax regime offers lower slab rates and simplicity, while the old regime benefits those with multiple deductions and exemptions. Choosing the right regime is key to maximizing tax efficiency.
Proper tax planning, using rebates like Section 87A, and investing in eligible instruments can significantly reduce your tax liability. Senior citizens gain higher exemption limits, and all taxpayers can benefit from smart financial strategies. Staying informed ensures smooth filing and optimal savings.
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Frequently Asked Questions
What are the new income tax slabs for FY 2025‑26?
Under the new regime, income up to 4 lakh is tax-free. Slabs range from 5% to 30% for higher income levels.
Who can opt for the old tax regime?
All individual taxpayers can choose the old regime to claim exemptions and deductions. Senior citizens get higher tax-free limits.
What is the Section 87A rebate?
Section 87A allows taxpayers with taxable income up to 12 lakh to reduce their tax liability to zero under the new regime.
Are there higher exemptions for senior citizens?
Yes. Individuals aged 60–80 get up to 3 lakh tax-free, and those above 80 get up to 5 lakh.
How can I reduce my tax liability?
Choose the right tax regime, claim deductions, invest in tax-saving instruments, and use rebates effectively to minimize taxes.
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