Income Tax Slab Rates for FY 2025-26: Know the Rates Under New and Old Tax Regime

As this is the last week of March 2025, the next financial year, 2025-26, is just a few days away, and many changes will take place from April 1, 2025. One of the biggest changes is the new income tax slabs, which Finance Minister Nirmala Sitharaman introduced in the Union Budget 2025-26. Taxpayers should be aware of these changes to make sure they’re ready for the new financial year.

Let us take a look at the latest income tax slabs under the new tax regime and the old tax regime for the new Financial year 2025-26.

New income tax slabs under the new tax regime

Under the new income tax regime of the new income tax slabs, effective from April 1, 2025, the basic exemption is increased from Rs. 3 lakh to Rs. 4. Therefore, Individuals having a total income less than Rs.4 lakh will not have to file an income tax return.

The government also raised the tax rebate under Section 87A. The tax rebate allows taxpayers to reduce their tax liability to zero if their net taxable income is not more than the specified limit.

In the financial year 2024-26, if your taxable income is up to Rs.7 lakh, you will get a rebate of Rs.25,000, which will make your total tax payable zero.

Starting April 1, 2025, if your net taxable income is Rs.12 lakh or less, you will get a tax rebate of Rs.60,000 under Section 87A, this will make your tax liability zero. Therefore, an individual with a net taxable income of Rs.12 lakh will get a tax saving of Rs.83,200, including the cess.

It’s important to understand that while the income tax slabs have changed under the new tax regime, deductions will remain the same. A salaried taxpayer will still get a standard deduction of Rs 75,000. Additionally, if your employer contributes to your National Pension Scheme (NPS) account, you will still receive a deduction of 14% of the basic for the employer’s contribution.

Income Tax Slabs under the Old Tax Regime

The income tax slabs under the old tax regime remain the same. Since the new tax regime was introduced in FY 2020-21, the government has only made changes to it.

The old tax regime allowed several deductions and exemptions, unlike the new tax regime. This includes exemptions for house rent allowance (HRA) and leave travel allowance (LTA). You can also claim a deduction of up to Rs.1.5 lakh under Section 80C for investments, an additional NPS deduction of Rs.50,000, and a Section 80D deduction of Rs.25,000/50,000 for medical insurance premiums, depending on your age.