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

Income tax slabs are the income ranges set by the government that determine how much tax you pay based on how much you earn, the more you earn the higher tax rate is applied to that income portion. Unlike a flat tax rate, India follows a progressive tax system where only the income falling within each slab is taxed at that slab’s rate. This means if you earn Rs. 12 lakh, you do not pay 10% tax on your Rs. 12 lakh income rather, you pay 0% on the first Rs. 4 lakh, 5% on the next Rs. 4 lakh, and 10% on the remaining Rs. 4 lakh. 

For FY 2025-26 and FY 2026-27, Indian taxpayers can choose between the New Tax Regime (default tax regime) and Old Tax Regime (optional tax regime) depending on which tax regime is more beneficial to the taxpayer. Choosing the right regime ensures minimum tax liability and maximum tax savings. 

Current Income Tax Slabs

The current income tax slabs under Old Tax Regime are as follows: 0% up to Rs. 2.5 lakh, 5% on Rs. 2.5 lakh to Rs. 5 lakh, 20% on Rs. 5 lakh to Rs. 10 lakh, and 30% on income above Rs. 10 lakh. 

The New Tax Regime slabs are 0% up to Rs. 4 lakh, 5% on Rs. 4 lakh to Rs. 8 lakh, 10% on Rs. 8 lakh to Rs. 12 lakh, 15% on Rs. 12 lakh to Rs. 16 lakh, 20% on Rs. 16 lakh to Rs. 20 lakh, 25% on Rs. 20 lakh to Rs. 24 lakh, and 30% on income above Rs. 24 lakh.

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

Section 115BAC new tax regime is the default tax regime for FY 2025-26. It offers lowers tax rates with limited deductions and a basic exemption limit of Rs. 4 lakh. The new tax regime slabs are as follows:

New Tax Regime Slabs	New Tax Regime Rates
Up to Rs. 4 lakh	Nil
Rs. 4 lakh to Rs. 8 lakh	5%
Rs. 8 lakh to Rs. 12 lakh	10%
Rs. 12 lakh to Rs. 16 lakh	15%
Rs. 16 lakh to Rs. 20 lakh	20%
Rs. 20 lakh to Rs. 24 lakh	25%
Above Rs. 24 lakh	30%

Key Feature of the New Tax Regime:

• Standard deduction of Rs. 75,000 for salaried employees.
• Income up to Rs. 12 lakh is effectively tax-free due to tax rebate under Section 87A
• Deductions such as HRA, 80C, 80D etc., are disallowed under the new tax regime. 

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. 

Income Tax Slabs	Income Tax Rate
Up to Rs. 2.5 lakh	Nil
Rs. 2.5 lakh to Rs. 5 lakh	5%
Rs. 5 lakh to Rs. 10 lakh	20%
Above Rs. 10 lakh	30%

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.