Indian Taxation
Jul 2, 2025

Latest Income Tax Slab Rate FY 2025-26: Breakdown of Both Regimes

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Pooja Lodariya

CA

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The new financial year has already started, and so have the latest Income Tax Slab Rate FY 2025-26 updates. Whether you’re a salaried pro, a business boss, or just want to keep more of your hard-earned cash, this guide is your shortcut to understanding the new and old tax regimes; no jargon, just facts. Let’s jump right in!

New Tax Regime for FY 2025-26: Simpler, Smoother, and Default!

Who’s In?

  • All individuals, HUFs, AOPs, BOIs, and Artificial Juridical Persons.
  • Default regime, you’re in unless you actively choose the Old Regime.

Latest Income Tax Slab Rate FY 2025-26 (New Regime)

Income Slab (₹)Tax Rate (%)
Up to 4,00,0000
4,00,001 – 8,00,0005
8,00,001 – 12,00,00010
12,00,001 – 16,00,00015
16,00,001 – 20,00,00020
20,00,001 – 24,00,00025
Above 24,00,00030

Pro Tip: No tax for income up to ₹4 lakh. The new regime is all about simplicity; fewer deductions, but lower rates and less paperwork.

Key Benefits & Updates

  • Rebate Rocket: Section 87A rebate hiked to ₹60,000 (up from ₹25,000). If your taxable income is up to ₹12 lakh, your tax liability is zero after rebate.
  • Standard Deduction: Salaried individuals and pensioners are eligible for a ₹75,000 deduction, making their taxable income zero up to ₹12.75 lakh (after rebates and deductions).
  • Progressive Structure: Higher earners pay more, but everyone gets a bigger breather at the bottom.
  • No Major Deductions: Most exemptions (like 80C, HRA, LTA) are not available, except for NPS employer contribution, standard deduction, and a few others.

Who Should Choose the New Regime?

  • Don’t have a ton of investments or deductions? Like things simple? The new regime is built for you.
  • Young professionals, gig workers, and people with simple income sources appreciate this setup.

The Old Tax Regime for FY 2025-26: A Focus On Deductions 🏦

Who’s In?

  • Anyone who wants to claim classic deductions (Section 80C, 80D, HRA, LTA, home loan, etc.).
  • Not default: you must opt in every year (if you’re salaried) or via Form 10-IEA (if you’re in business/profession).

Income Tax Slab Rate FY 2025-26 (Old Regime)

Income Slab (₹)Tax Rate (%)
Up to 2,50,0000
2,50,001 – 5,00,0005
5,00,001 – 10,00,00020
Above 10,00,00030

Note: Surcharge and cess apply as usual. Senior and super senior citizens enjoy higher exemption limits.

Key Benefits

  • Full Power Deductions: Max out on 80C (₹1.5 lakh), 80D (health insurance), HRA, LTA, home loan interest, and more.
  • Tax Planning Playground: If you invest smartly, your taxable income can shrink, sometimes dramatically.
  • Flexibility: Great for families with home loans, insurance, and big investments.

Who Should Choose the Old Regime?

  • Got big investments, insurance premiums, or rent payments? The old regime might still be your best friend.
  • If you’re a deduction-maximizer, run the numbers, you could save more here.

How to Switch Between Regimes?

  • Salaried/Non-Business: Choose your tax regime each year when filing your Income Tax Return (ITR).
  • Business/Profession: You can switch, but only once in a lifetime, choose wisely! Opt in or out using Form 10-IEA.
  • Pro Move: Use online tax calculators to compare your tax outgo under both regimes before you file.

Special Slabs for Senior Citizens & Super Senior Citizens

  • Senior Citizens (60-79 years): Exemption limit is ₹3,00,000 under the old regime.
  • Super Senior Citizens (80+ years): Exemption limit is ₹5,00,000 under the old regime.
  • The new regime does not provide higher exemption limits for seniors, but the rebate and standard deduction apply.

Surcharge & Cess: The Fine Print

  • Surcharge: Applied if your income exceeds ₹50 lakh, with rates varying by income bracket.
  • Health & Education Cess: 4% on income tax plus surcharge, applicable in both tax regimes.

Income Tax Slab Rate FY 2025-26: Key Changes You Can’t Miss

  • Default Regime: New regime is now the default for all individuals, HUFs, AOPs, BOIs, and Artificial Juridical Persons.
  • Higher Rebate: Section 87A rebate raised to ₹60,000, making the new regime more appealing for middle-income earners.
  • Standard Deduction: Now ₹75,000 for salaried and pensioners, boosting tax-free income up to ₹12.75 lakh.
  • Simplified Slabs: More progressive, wider brackets, and less paperwork in the new regime.
  • Old Regime Still Alive: All classic deductions and exemptions available, but you must opt-in.

Which Income Tax Slab Rate FY 2025-26 Regime Should You Choose?

Quick Comparison Table

FeatureNew Regime (FY 2025-26)Old Regime (FY 2025-26)
Default?YesNo (must opt in)
Slab RatesLower, progressiveHigher, fewer slabs
Deductions/ExemptionsLimited (standard deduction, NPS)Full range (80C, HRA, etc.)
RebateUp to ₹60,000Up to ₹12,500
Standard Deduction₹75,000₹50,000 (salaried)
Best ForSimple incomes, fewer deductionsDeduction-maximizers

Frequently Asked Questions (FAQs)

Q1: Can I switch regimes every year?

A: If you’re salaried or have non-business income, yes! For business/professional income, switching is limited, choose carefully.

Q2: What about HRA, LTA, and 80C?

A: Only available under the Old Tax Regime. The New Regime skips most deductions for simplicity.

Q3: How do I claim the higher standard deduction?

A: It’s automatic for salaried and pensioners in the new regime, no extra paperwork needed.

Q4: Are there special slabs for seniors in the new regime?

A: Nope. The new regime has the same slabs for all, but the old regime has higher exemption limits for seniors.

Pro Tips for Tax Planning in FY 2025-26

  • Run the Numbers: Use a tax calculator to compare your liability under both regimes before you file.
  • Keep Proofs Ready: If you’re sticking with the old regime, keep all investment and expense proofs handy for deductions.
  • Plan Ahead: Major life changes (job switch, home loan, new investments) can impact which regime is better for you.
  • Consult a Pro: Complex finances? Consult a CA or tax advisor for tailored advice.

Income Tax Slab Rate FY 2025-26: Smarter Choices, Bigger Savings

The latest Income Tax Slab Rate FY 2025-26 is all about flexibility and empowerment. The new regime is simpler and more attractive for many, but if you’re a deduction ninja, the old regime still packs a punch. The best regime is the one that fits your unique financial story; so take a few minutes, crunch the numbers, and make your money work smarter for you.

TL;DR: What’s New in Income Tax Slab Rate FY 2025-26?

  • Budget 2025 shook things up: new slabs, higher rebates, and a default regime switch.
  • New Regime is now the default for most taxpayers (but the Old Regime is still there if you love your deductions).
  • Standard deduction and rebate limits have gone up, making tax savings easier for many.
  • This guide covers both regimes, so you can pick the one that fits your wallet best.

Stay savvy, stay compliant, and may your refunds be swift! 💸

Also Read:

  1. ITR Filing Due Date for FY 2024-25: Updates and Compliance Tips for CA

  2. How to Choose the Right GST AI Tool for Your Firm

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