The Indian income tax system is a cornerstone of financial planning, and staying updated with the latest tax slabs is essential for taxpayers across all categories, salaried individuals, senior citizens, super senior citizens, Hindu Undivided Families (HUFs), and businesses. The Union Budget 2025 has introduced significant changes to the income tax slabs for the Financial Year (FY) 2025-26, corresponding to the Assessment Year (AY) 2026-27. These revisions aim to simplify tax compliance, reduce tax burdens, and boost disposable income for millions of taxpayers. This comprehensive guide provides a detailed breakdown of the Income Tax Slab 2025-26 under both the new and old tax regimes, highlights key differences, and offers insights to help you choose the best option for your financial needs.
Income Tax Slab by CashMints is a clear and practical guide that helps readers understand how income taxes work and how they impact personal finances. Tax rules can often feel confusing, but this book breaks them down into simple explanations so that anyone can grasp the basics without needing a financial background.
The book begins by explaining what an income tax slab is and why governments use this system. It outlines how tax brackets are structured, how taxable income is calculated, and what deductions or exemptions may apply. CashMints makes the process easy to follow by using step-by-step examples that show how to determine tax liability under different income levels.
Beyond the basics, the guide also explores common allowances, rebates, and exemptions that individuals can use to reduce their tax burden legally. Topics such as standard deductions, retirement savings contributions, and housing-related benefits are explained in a straightforward way so readers can see how these apply to everyday situations.
The book doesn’t just cover numbers, it also stresses the importance of planning ahead. CashMints highlights how proper tax planning can help individuals keep more of their earnings, avoid last-minute stress during filing season, and work toward long-term financial goals. It explains the difference between tax avoidance and tax evasion, emphasizing ethical practices while maximizing benefits.
Another valuable feature of the guide is its focus on updating readers’ understanding. Since tax laws often change, CashMints shows how to stay informed and adapt your financial strategy each year, ensuring compliance while taking advantage of new provisions.
Income Tax Slab is perfect for salaried professionals, freelancers, business owners, or anyone looking to demystify taxes. With its simple explanations and practical tips, it provides a foundation for smarter financial decisions and better tax management.
Understanding the Indian Income Tax System
India’s income tax structure is progressive, meaning tax rates increase with higher income levels. Taxpayers can choose between two regimes: the new tax regime (default, with lower tax rates but fewer deductions) and the old tax regime (higher tax rates but more deductions and exemptions). The choice depends on your income level, eligible deductions, and financial goals. The Budget 2025 revisions have made the new tax regime more attractive, particularly for those with fewer deductions, by increasing exemption limits and enhancing rebates.
Key Highlights of Budget 2025 for FY 2025-26
- New Tax Regime as Default: Unless you opt out, the new regime applies automatically.
- Increased Exemption Limit: The basic exemption limit under the new regime rises to ₹4 lakh from ₹3 lakh.
- Higher Rebate under Section 87A: A rebate of up to ₹60,000 makes income up to ₹12 lakh tax-free in the new regime.
- Standard Deduction: Salaried individuals and pensioners can claim a ₹75,000 standard deduction under the new regime, up from ₹50,000.
- Surcharge Adjustments: The highest surcharge rate is capped at 25% for high-income earners.
- Old Regime Continuity: Deductions like Section 80C, 80D, and HRA remain available for those opting for the old regime.
Income Tax Slabs 2025-26 (AY 2026-27)
New Tax Regime Slabs
The new tax regime is designed to simplify taxation by reducing exemptions and offering lower tax rates. Below are the income tax slabs for all taxpayers (individuals, HUFs, AOPs, BOIs, and artificial juridical persons) under the new regime for FY 2025-26:
| Income Range (₹) | Tax Rate |
| Up to 4,00,000 | Nil |
| 4,00,001 – 8,00,000 | 5% |
| 8,00,001 – 12,00,000 | 10% |
| 12,00,001 – 16,00,000 | 15% |
| 16,00,001 – 20,00,000 | 20% |
| 20,00,001 – 24,00,000 | 25% |
| Above 24,00,000 | 30% |
Key Benefits:
- Tax-Free Income Up to ₹12 Lakh: A rebate under Section 87A of up to ₹60,000 ensures zero tax liability for incomes up to ₹12 lakh.
- Standard Deduction for Salaried Individuals: A ₹75,000 deduction reduces taxable income, making incomes up to ₹12.75 lakh tax-free for salaried taxpayers.
- No Age-Based Slabs: The new regime applies uniformly to all individuals, regardless of age.
Example:
Mr. Arjun, a salaried individual, earns ₹10 lakh annually in FY 2025-26. His taxable income after the ₹75,000 standard deduction is ₹9,25,000. Under the new regime:
- Income up to ₹4 lakh: Nil
- ₹4 lakh to ₹8 lakh: 5% of ₹4 lakh = ₹20,000
- ₹8 lakh to ₹9,25,000: 10% of ₹1,25,000 = ₹12,500
- Total tax before rebate: ₹32,500
- Rebate under Section 87A: ₹32,500 (as income < ₹12 lakh)
- Final Tax Liability: ₹0
Old Tax Regime Slabs
The old tax regime allows taxpayers to claim various deductions and exemptions, such as Section 80C (up to ₹1.5 lakh), 80D (medical insurance), HRA, and LTA. However, tax rates are higher compared to the new regime. The slabs vary based on age categories:
General Category (Below 60 Years)
| Income Range (₹) | Tax Rate |
| Up to 2,50,000 | Nil |
| 2,50,001 – 5,00,000 | 5% |
| 5,00,001 – 10,00,000 | 20% |
| Above 10,00,000 | 30% |
Senior Citizens (60 to 79 Years)
| Income Range (₹) | Tax Rate |
| Up to 3,00,000 | Nil |
| 3,00,001 – 5,00,000 | 5% |
| 5,00,001 – 10,00,000 | 20% |
| Above 10,00,000 | 30% |
Super Senior Citizens (80 Years and Above)
| Income Range (₹) | Tax Rate |
| Up to 5,00,000 | Nil |
| 5,00,001 – 10,00,000 | 20% |
| Above 10,00,000 | 30% |
Key Benefits:
- Rebate under Section 87A: A rebate of up to ₹12,500 makes income up to ₹5 lakh tax-free.
- Standard Deduction: ₹50,000 for salaried individuals and pensioners.
- Deductions: Eligible for Section 80C (₹1.5 lakh), 80D, HRA, LTA, and more.
Example:
Ms. Priya, aged 35, earns ₹12 lakh annually and claims ₹1.5 lakh under Section 80C, ₹50,000 under Section 80D, and ₹50,000 standard deduction. Her taxable income is ₹9.5 lakh:
- Income up to ₹2.5 lakh: Nil
- ₹2.5 lakh to ₹5 lakh: 5% of ₹2.5 lakh = ₹12,500
- ₹5 lakh to ₹9.5 lakh: 20% of ₹4.5 lakh = ₹90,000
- Total tax: ₹1,02,500
- Health and Education Cess (4%): ₹4,100
- Final Tax Liability: ₹1,06,600
Surcharge Rates
A surcharge applies to high-income taxpayers under both regimes:
- 10%: If total income exceeds ₹50 lakh but is less than ₹1 crore.
- 15%: If total income exceeds ₹1 crore but is less than ₹2 crore.
- 25%: If total income exceeds ₹2 crore.
- Marginal Relief: Ensures the surcharge does not disproportionately burden taxpayers just crossing the threshold.
Health and Education Cess
A 4% cess is added to the total tax payable (including surcharge, if applicable) under both regimes.
Comparing New and Old Tax Regimes
Choosing between the new and old tax regimes depends on your income, deductions, and financial planning goals. Here’s a quick comparison:
| Feature | New Tax Regime | Old Tax Regime |
| Tax Rates | Lower, starting at 5% above ₹4 lakh | Higher, starting at 5% above ₹2.5 lakh |
| Exemption Limit | ₹4 lakh (all categories) | ₹2.5 lakh (general), ₹3 lakh (senior), ₹5 lakh (super senior) |
| Rebate (Section 87A) | Up to ₹60,000 (₹12 lakh tax-free) | Up to ₹12,500 (₹5 lakh tax-free) |
| Standard Deduction | ₹75,000 (salaried/pensioners) | ₹50,000 (salaried/pensioners) |
| Deductions/Exemptions | Limited (e.g., employer NPS contribution) | Multiple (80C, 80D, HRA, LTA, etc.) |
| Suitability | Best for low deductions | Best for high deductions |
When to Choose the New Regime:
- If your deductions are less than ₹3.75 lakh.
- If you prefer simplicity and lower tax rates.
- If your income is up to ₹12.75 lakh (salaried) or ₹12 lakh (others).
When to Choose the Old Regime:
- If you have significant deductions (e.g., ₹1.5 lakh under 80C, HRA, home loan interest).
- If you’re a senior or super senior citizen benefiting from higher exemption limits.
Special Considerations for Different Categories
Salaried Individuals
- New Regime: The ₹75,000 standard deduction makes incomes up to ₹12.75 lakh tax-free. Ideal for those with minimal investments or deductions.
- Old Regime: Benefits those with high HRA, home loan interest, or Section 80C investments.
Senior Citizens (60–79 Years)
- Old Regime: Higher exemption limit of ₹3 lakh and deductions make it attractive for those with medical expenses (Section 80D) or investments.
- New Regime: No special slabs, but the ₹12 lakh tax-free limit is beneficial for lower incomes.
Super Senior Citizens (80+ Years)
- Old Regime: Exemption limit of ₹5 lakh and deductions like 80D (up to ₹50,000 for medical insurance) are advantageous.
- New Regime: Uniform slabs apply, but the rebate up to ₹12 lakh reduces tax liability.
Hindu Undivided Families (HUFs)
- HUFs follow the same slabs as individuals under both regimes. The old regime allows deductions like 80C, while the new regime offers lower rates and a ₹12 lakh tax-free limit.
Businesses and Professionals
- New Regime: Simplified tax filing with no deductions like Section 80C or 80D. Suitable for those with minimal business-related deductions.
- Old Regime: Allows deductions for business expenses, depreciation, and investments, benefiting those with high allowable expenses.
Also Read: How to Start a Monthly Budget: Step By Step Guide
How to Calculate Your Tax Liability
- Determine Gross Income: Include salary, business income, house property, capital gains, and other sources.
- Subtract Deductions: Apply eligible deductions (e.g., standard deduction, 80C, 80D) based on the chosen regime.
- Calculate Taxable Income: Subtract deductions from gross income.
- Apply Slab Rates: Use the relevant tax slab rates for your income and regime.
- Add Surcharge (if applicable): Apply surcharge for incomes above ₹50 lakh.
- Add Cess: Apply 4% Health and Education Cess on the total tax.
- Subtract Rebate: Apply Section 87A rebate if eligible (₹60,000 for new regime, ₹12,500 for old regime).
Example (New Regime):
Ms. Neha earns ₹15 lakh and claims a ₹75,000 standard deduction:
- Taxable income: ₹14,25,000
- Tax: ₹20,000 (5% on ₹4–8 lakh) + ₹40,000 (10% on ₹8–12 lakh) + ₹33,750 (15% on ₹12–14.25 lakh) = ₹93,750
- Cess (4%): ₹3,750
- Total Tax: ₹97,500
Key Changes Effective from April 1, 2025
- TDS Thresholds: Increased for various sections (e.g., LRS remittance threshold raised to ₹10 lakh).
- TCS Changes: No TCS on educational loans; TCS on sale of goods (Section 206C(1H)) removed.
- ITR Filing Deadline: Extended to September 15, 2025, for AY 2025-26.
- Updated ITR Deadline: Extended to 48 months from 12 months for filing updated returns.
Tips for Tax Planning in FY 2025-26
- Compare Regimes Annually: Use online tax calculators to compare tax liability under both regimes.
- Maximize Deductions (Old Regime): Invest in PPF, ELSS, or insurance to claim Section 80C deductions.
- Leverage Standard Deduction: Salaried individuals should factor in the ₹75,000 deduction in the new regime.
- File ITR Early: Avoid penalties by filing before September 15, 2025.
- Consult a CA: For complex incomes or high deductions, seek professional advice.
Conclusion – Income Tax Slab 2025-26
The income tax slabs for FY 2025-26 offer significant relief, especially under the new tax regime, with a tax-free limit of up to ₹12 lakh and a higher standard deduction of ₹75,000. Whether you’re a salaried individual, senior citizen, or business owner, understanding these slabs and choosing the right regime can save you substantial taxes. Evaluate your deductions, income sources, and financial goals to make an informed decision. Stay proactive, plan your taxes wisely, and file your ITR on time to maximize benefits.
Take control of your finances today! Use our free tax calculator on the CashMints website to compare the new and old tax regimes and estimate your Income Tax Slab 2025-26. Don’t miss out, file your ITR early and consult our expert CAs for personalized tax planning. Visit CashMints.com now to start saving!
FAQs – Income Tax Slab 2025-26
1. What is the basic exemption limit under the new Income Tax Slab 2025-26?
The basic exemption limit is ₹4 lakh for all taxpayers, with a rebate under Section 87A making income up to ₹12 lakh tax-free.
2. Can senior citizens claim higher exemption limits in the new tax regime?
No, the new regime has uniform slabs for all age groups, with no special exemptions for senior or super senior citizens.
3. What is the standard deduction for salaried individuals in FY 2025-26?
The standard deduction is ₹75,000 under the new regime and ₹50,000 under the old regime.
4. Is ITR filing mandatory if my income is below ₹12 lakh in the new regime?
ITR filing is mandatory if your income exceeds ₹4 lakh, even if your tax liability is nil due to the Section 87A rebate.
5. Can I switch between the new and old tax regimes every year?
Yes, non-business taxpayers can choose either regime annually while filing ITR, provided they meet the due date under Section 139(1).
6. What deductions are available in the new tax regime?
Limited deductions are allowed, including the ₹75,000 standard deduction and employer’s NPS contribution under Section 80CCD(2).
7. How does the surcharge work for high-income earners?
A surcharge applies on incomes above ₹50 lakh: 10% (₹50 lakh–₹1 crore), 15% (₹1 crore–₹2 crore), and 25% (above ₹2 crore), with marginal relief for threshold crossers.
8. What is the Health and Education Cess rate?
A 4% cess is applied on the total tax payable (including surcharge) under both regimes.
9. Are HUFs eligible for the same tax slabs as individuals?
Yes, HUFs follow the same slabs as individuals under both the new and old tax regimes.
10. When is the ITR filing deadline for AY 2026-27?
The deadline is September 15, 2025, extended from July 31, as per Budget 2025 announcements.
