For the financial year 2025-26, income tax slabs in India under the old and new regimes look very different from each other. The new regime, which applies by default, taxes individual income across seven slabs beginning at nil up to ₹4,00,000 and rising to 30% above ₹24,00,000, with almost no deductions allowed. The old regime, which you must actively opt into, keeps its long-standing four-slab structure starting at nil up to ₹2,50,000 and reaching 30% above ₹10,00,000, but lets you reduce your taxable income substantially through deductions like Section 80C, 80D, and home loan interest.
New Regime Slabs for FY 2025-26
The new tax regime under Section 115BAC is the default for all individuals, Hindu Undivided Families, and Associations of Persons. You do not need to file any form or make an election. If you do nothing, you are assessed under these rates. Budget 2025 raised the nil-tax threshold from ₹3 lakh to ₹4 lakh and widened every subsequent bracket, producing seven slabs.
- Up to ₹4,00,000: No tax
- ₹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%
Only the portion of your income within each bracket is taxed at that bracket’s rate. Someone earning ₹14,00,000 pays nothing on the first ₹4 lakh, 5% on the next ₹4 lakh, 10% on the next ₹4 lakh, and 15% on the remaining ₹2 lakh, totalling ₹90,000 before cess.1Income Tax Department. Return Applicable These rates are uniform regardless of age, gender, or residency. The old regime’s special thresholds for seniors do not exist here.
What You Can Still Deduct
The new regime strips away most deductions, but a few survive. Salaried individuals and pensioners get a flat ₹75,000 standard deduction from gross salary before the slabs apply. You can also claim your employer’s contribution to NPS under Section 80CCD(2) up to 14% of basic salary, and interest paid on a let-out property under Section 24 with no upper cap.2Income Tax Department. Salaried Individuals for AY 2026-27 A ₹25,000 deduction against family pension income is allowed, along with exemptions on gratuity, leave encashment, and voluntary retirement proceeds. Section 80C, Section 80D, and the ₹2 lakh cap on home loan interest for a self-occupied property are not available under the new regime.
Zero Tax Up To ₹12 Lakh
The Budget 2025 headline was that individuals earning up to ₹12 lakh pay zero income tax under the new regime.3Press Information Bureau. No Income Tax on Annual Income Upto Rs. 12 Lakh This works through the Section 87A rebate. If your total taxable income after deductions does not exceed ₹12,00,000, the rebate equals your full tax liability. Tax on ₹12 lakh under the new slabs comes to ₹60,000, and the rebate covers all of it.
For salaried taxpayers, the ₹75,000 standard deduction pushes the effective zero-tax salary to ₹12,75,000. A gross salary of ₹12,75,000 minus the standard deduction leaves taxable income of ₹12,00,000, which the rebate then wipes out.
Marginal Relief Just Above ₹12 Lakh
If your taxable income slightly crosses ₹12 lakh, the tax code does not load the full slab-rate tax on you all at once. Marginal relief ensures your total tax never exceeds the amount by which your income exceeds ₹12 lakh. At a taxable income of ₹12,15,000, the tax is capped at ₹15,000 plus 4% cess, not the ₹62,250 the slab calculation would otherwise produce. The rebate under Section 87A is reduced only by enough to keep the tax equal to the excess income above ₹12 lakh. Crossing the threshold by a small margin does not cost you the full ₹60,000 rebate.
Old Regime Slabs for FY 2025-26
The old regime uses a simpler four-bracket structure that has not changed in years. You have to actively choose this regime during filing since it is no longer the default.
- Up to ₹2,50,000: No tax
- ₹2,50,001 to ₹5,00,000: 5%
- ₹5,00,001 to ₹10,00,000: 20%
- Above ₹10,00,000: 30%
The rates look steeper than the new regime, with an abrupt jump from 5% to 20% at ₹5 lakh. The old regime compensates by letting you reduce your taxable income substantially before these rates apply.2Income Tax Department. Salaried Individuals for AY 2026-27
Deductions That Make the Old Regime Worth It
The three most widely used deductions under the old regime are:
- Section 80C, up to ₹1,50,000, covering EPF and PPF contributions, ELSS mutual funds, life insurance premiums, tuition fees for children, and the principal portion of a home loan, among others.
- Section 80D, up to ₹25,000 for health insurance premiums covering yourself and family if you are under 60, or up to ₹50,000 if any insured family member is a senior citizen. A separate ₹25,000 to ₹50,000 deduction applies for insuring your parents.
- Section 24, up to ₹2,00,000 on home loan interest for a self-occupied property.
A salaried homeowner with health insurance can shave ₹4,25,000 or more off taxable income through these three sections alone, a reduction that is not available under the new regime.4Income Tax Department. Senior Citizens and Super Senior Citizens Section 80E covers education loan interest, Section 80G covers charitable donations, and Section 80TTA allows up to ₹10,000 on savings account interest.
Senior and Super Senior Citizen Slabs
Age-based relief exists only under the old regime. The new regime treats everyone the same regardless of age.
Senior citizens, aged 60 to less than 80 during the financial year, get a basic exemption of ₹3,00,000:
- Up to ₹3,00,000: No tax
- ₹3,00,001 to ₹5,00,000: 5%
- ₹5,00,001 to ₹10,00,000: 20%
- Above ₹10,00,000: 30%
Super senior citizens, aged 80 or above, get a ₹5,00,000 basic exemption and skip the 5% bracket entirely:
- Up to ₹5,00,000: No tax
- ₹5,00,001 to ₹10,00,000: 20%
- Above ₹10,00,000: 30%
A super senior citizen earning ₹8,00,000 under the old regime pays 20% on the ₹3 lakh above the exemption, or ₹60,000. Under the new regime the same person owes 5% on the slice between ₹4 lakh and ₹8 lakh, totalling ₹20,000 before the rebate. The new regime often works better for retirees with limited deductions, but seniors with meaningful 80C investments, health premiums, and home loan interest can still come out ahead on the old side.4Income Tax Department. Senior Citizens and Super Senior Citizens
Choosing and Switching Between Regimes
How freely you can switch depends on whether you have business or professional income.
If you earn only salary, pension, interest, capital gains, or rental income, you can switch between regimes every year at the time of filing. No forms, no restrictions. You select whichever regime you want during the filing process for that year.
If you have income from a business or profession, the rules tighten sharply. You must file Form 10-IEA to opt out of the new regime and into the old one, and it has to be filed before your return due date. A late submission makes the form invalid. If you later want to switch back to the new regime, you can do so only once, by filing Form 10-IEA with the “re-enter” option. After that single switch back, you are locked into the new regime permanently for as long as you have business income.5Income Tax Department. Form 10-IEA FAQ
Salaried employees can compare both regimes each year and pick the better one. Business owners should think carefully before opting out of the new regime, because the path back is a one-time opportunity.
Surcharge and Cess On Top of Slab Tax
Your final tax bill is not just the slab calculation. Two additional charges sit on top: a surcharge for high earners and a 4% Health and Education Cess that applies to everyone. The cess is calculated on the sum of income tax and any surcharge, not on gross income.
Surcharge kicks in once total income crosses ₹50 lakh:
- ₹50 lakh to ₹1 crore: 10% (both regimes)
- ₹1 crore to ₹2 crore: 15% (both regimes)
- ₹2 crore to ₹5 crore: 25% (both regimes)
- Above ₹5 crore: 25% under the new regime, 37% under the old regime
The new regime caps the maximum surcharge at 25%, a meaningful difference for anyone earning above ₹5 crore, where the old regime pushes surcharge to 37%.6Income Tax Department. Individual Having Income From Business or Profession for AY 2026-27
Marginal relief applies at each surcharge threshold too. If your income is just above ₹50 lakh, the surcharge on your full tax bill could exceed the extra income above the threshold. Marginal relief caps the additional tax and surcharge together so it never exceeds the income above ₹50 lakh. The same principle applies at ₹1 crore and ₹2 crore.