Comparing Income Tax Slabs for FY 2025-26, FY 2024-25 and FY 2023-24 under the New Tax Regime

The income tax slabs under the new tax regime have been announced for the financial year 2025-26. The taxpayers who strive to save income tax by making investments and savings will get benefits under the changes made in the income tax slabs under the new tax regime. Under the proposed changes to the new tax regime, a 30% tax rate will be levied on incomes above Rs.24 lakh, replacing the current limit of Rs.15 lakh.

Income Tax Slabs under the New Tax Regime for FY 2025-26 (AY 2026-27)

Highlighted features of the New Tax Regime

• The basic exemption limit for the new tax regime, which is applicable from April 1, 2025, is increased to 4 lakh. Currently, the basic exemption limit for FY 2024-25 is 3 lakh, regardless of age.
• The new tax regime is the default regime. Taxpayers can select the old tax regime in any financial year.
• The highest surcharged rate levied is 25% for those earning above Rs.2 crore.
• From April 1, the tax rebate under Section 87A will be allowed for taxable incomes up to Rs.12 lakh. For individuals with an income up to 12 lakh, the tax liability will be nil.

The changes made in the new tax regime will make it more attractive as compared to the old tax regime. In February 2023, the changes were proposed, including the introduction of standard deduction, an increase in the basic exemption limit, and a rise in tax rebates under Section 87A for taxable incomes of up to 7 lakh. The government made changes to the income tax slabs in the July 2024 budget under the new tax regime.

Current Income Tax Slabs under the New Tax Regime for FY 2024-25 (AY 2025-26)

What Changes were made in the New Tax Regime in the Budget 2025?

• Rise in the deduction claimed on the employer’s contributions to the NPS account from 10% to 14%.
•  The standard deduction limit increased by Rs. 25,000, from Rs. 50,000 to Rs. 75,000. This deduction is only for individuals who have income from salary or pension.
• Increase in the standard deduction limit for family pensioners by Rs. 10,000, from Rs. 15,000 to Rs.25,000.

Income Tax Slabs under the New Tax Regime for FY 2023-24 (AY 2024-25)

Following are the income tax slabs for taxpayers who are filing income tax returns for the previous financial year, 2023-24 (AY 2024-25)