Income Tax Slab for FY 2025-26 Explained
Understanding income tax slabs is one of the most important parts of tax planning. If you know how slab rates work, it becomes easier to estimate your tax, compare old and new regime, and decide whether you should invest more for deductions.
For FY 2025-26, the new tax regime has a revised slab structure, and it is now the default regime for many individual taxpayers. At the same time, the old regime continues to remain available for eligible taxpayers who want to claim deductions and exemptions.
You can also use our Tax Calculator to compare both regimes and see which one gives you lower tax.
What Are Income Tax Slabs?
Income tax slabs are ranges of income on which different tax rates apply. Instead of paying one flat rate on the full income, tax is calculated in parts. As income moves to a higher slab, only the portion in that slab is taxed at the higher rate.
New Tax Regime Slab for FY 2025-26
Under the new tax regime for FY 2025-26, the slab structure is as follows:
| Income Slab | Tax Rate |
|---|---|
| Up to ₹4,00,000 | Nil |
| ₹4,00,001 to ₹8,00,000 | 5% |
| ₹8,00,001 to ₹12,00,000 | 10% |
| ₹12,00,001 to ₹16,00,000 | 15% |
| ₹16,00,001 to ₹20,00,000 | 20% |
| ₹20,00,001 to ₹24,00,000 | 25% |
| Above ₹24,00,000 | 30% |
These new slab rates were officially announced in Budget 2025 and are also reflected in the current Income Tax Department guidance for AY 2026-27.
Nil Tax Benefit Under New Regime
One of the biggest highlights of FY 2025-26 is that under the new regime, no income tax is payable up to ₹12 lakh of taxable income for eligible resident individuals because of rebate relief.
For salaried taxpayers, this can effectively extend to ₹12.75 lakh in many normal cases because the standard deduction under the new regime is ₹75,000.
Old Tax Regime Slab for FY 2025-26
The old regime still uses the traditional slab structure and remains useful for people who want to claim deductions like 80C, 80D, HRA, and home loan benefits.
For individuals below 60 years of age, the old regime slab commonly works like this:
| Income Slab | Tax Rate |
|---|---|
| Up to ₹2,50,000 | Nil |
| ₹2,50,001 to ₹5,00,000 | 5% |
| ₹5,00,001 to ₹10,00,000 | 20% |
| Above ₹10,00,000 | 30% |
In the old regime, senior citizens and super senior citizens can have different basic exemption limits, which is why age matters while calculating tax under the old system.
Old Regime vs New Regime: Main Difference
The new regime offers lower slab rates but fewer deductions. The old regime offers more deductions and exemptions, but the slab rates are higher. This means the better regime depends on your salary structure and tax-saving claims.
| Point | Old Regime | New Regime |
|---|---|---|
| Slab Rates | Higher | Lower |
| 80C / 80D / HRA | Available | Mostly not available in the usual way |
| Standard Deduction for Salaried | ₹50,000 | ₹75,000 |
| Best For | People with deductions | People with fewer deductions |
How Tax Slab Calculation Works
Many people think the tax rate of the highest slab applies to the full income, but that is not how slab taxation works. Only the part of your income that falls into a particular slab is taxed at that slab’s rate.
For example, if part of your income falls in the 5% slab and the next part falls in the 10% slab, then different portions are taxed separately. This makes slab-based tax calculation more gradual.
Why Tax Slabs Matter for Salaried Employees
Tax slabs affect how much tax you finally pay, but the final outcome also depends on deductions, HRA, NPS, employer contribution, health insurance deduction, and home loan benefit where applicable.
That is why a salaried employee should never look at slab rates alone. Regime comparison is equally important.
Which Tax Slab Regime Is Better?
If you do not claim major deductions, the new regime may often be more beneficial because of the lower slab structure. If you claim deductions such as 80C, 80D, HRA, home loan interest, and NPS, the old regime may still work better.
The right answer depends on your actual numbers, not just on income level.
Best Way to Check Your Tax Slab Impact
The easiest way is to use our Income Tax Calculator and compare old vs new regime side by side. It helps you see taxable income, final tax, cess, and whether you may have refund or extra tax payable.
Frequently Asked Questions
What is the income tax slab for FY 2025-26?
Under the new regime, the revised slab starts with nil tax up to ₹4 lakh and goes up in steps to 30% above ₹24 lakh. The old regime continues with the traditional slab structure and deductions.
Is there no tax up to ₹12 lakh?
Under the new regime, eligible resident individuals can get nil tax up to ₹12 lakh taxable income because of rebate relief. For many salaried taxpayers, this can effectively go up to ₹12.75 lakh due to the ₹75,000 standard deduction.
What is the standard deduction in FY 2025-26?
For salaried taxpayers, the standard deduction is ₹50,000 in the old regime and ₹75,000 in the new regime.
Which tax regime is better?
The better regime depends on your deductions and salary structure. If deductions are low, the new regime may be better. If deductions are high, the old regime may still be useful.