Income Tax Slab Rates FY 2025-26 (AY 2026-27): Complete Guide

This guide covers the latest income tax slab rates for FY 2025-26 (Assessment Year 2026-27) as announced in Union Budget 2025. India has two tax regimes — the New Tax Regime (default) and the Old Tax Regime (optional). Below are the complete slab rates, rebate details, surcharge, and cess for all categories of individual taxpayers.

New Tax Regime Slabs — FY 2025-26 (Default)

The New Tax Regime under Section 115BAC is the default regime. Revised slabs as per Budget 2025:

Key features:

• Standard deduction: ₹75,000 for salaried/pensioners
• Rebate u/s 87A: Full rebate for income up to ₹12,00,000 (effectively zero tax up to ₹12,75,000 for salaried)
• Most deductions (80C, 80D, HRA, etc.) are not available
• Employer NPS contribution u/s 80CCD(2) is allowed

Old Tax Regime Slabs — FY 2025-26

The Old Regime is optional — you must explicitly opt out of the New Regime to use it.

Below 60 Years (Individuals & HUF)

Senior Citizens (60-79 Years)

Super Senior Citizens (80+ Years)

Key features:

• Standard deduction: ₹50,000 for salaried/pensioners
• All deductions available: 80C, 80D, HRA, 24(b), 80G, etc.
• Rebate u/s 87A: Full rebate for income up to ₹5,00,000

Note: Under the New Regime, the same slab rates apply to all age groups — there is no separate senior citizen benefit.

Rebate Under Section 87A

What This Means in Practice

New Regime:

• If your total income (after ₹75,000 standard deduction) is ≤ ₹12,00,000, you pay zero tax
• For salaried persons, this means gross salary up to ₹12,75,000 = zero tax
• If income exceeds ₹12,00,000 even by ₹1, the full rebate is lost (marginal relief applies)

Old Regime:

• If taxable income (after all deductions) is ≤ ₹5,00,000, you pay zero tax

Surcharge Rates — FY 2025-26

Surcharge applies on income tax (before cess) for higher incomes:

Note: Under the New Tax Regime, the maximum surcharge is capped at 25% (not 37% as in Old Regime for income above ₹5 crore). Under Old Regime, surcharge goes up to 37% for income above ₹5 crore.

Marginal relief: If the surcharge makes your total tax exceed the income above the threshold, marginal relief is provided to ensure you don't pay more tax than the additional income.

Health & Education Cess

• Rate: 4% on (Income Tax + Surcharge)
• Applies to: All taxpayers, both regimes
• Purpose: Funds health and education initiatives
• No deduction allowed for cess paid

Effective Tax Rate Examples — FY 2025-26

New Tax Regime

Assumes only standard deduction of ₹75,000. Actual tax may vary based on other eligible deductions.

How to Calculate Your Income Tax

Step 1: Determine Gross Total Income

Add all income sources: salary, house property, business/profession, capital gains, other sources.

Step 2: Subtract Deductions

• New Regime: Only standard deduction (₹75,000) and employer NPS
• Old Regime: All applicable deductions (80C, 80D, HRA, 24(b), etc.)

Step 3: Apply Slab Rates

Calculate tax on the taxable income using the applicable slab rates.

Step 4: Apply Rebate u/s 87A

If eligible, reduce tax to zero.

Step 5: Add Surcharge (if applicable)

If income exceeds ₹50 lakh, add surcharge.

Step 6: Add 4% Cess

Calculate cess on (tax + surcharge).

Step 7: Compare Both Regimes

Use the official calculator or compare manually. Choose the regime with lower tax. See our Old vs New Tax Regime comparison for detailed analysis.

Important Tips

1. New Regime is default — you don't need to do anything to opt for it; opt out only if Old Regime saves more
2. Income up to ₹12.75 lakh is tax-free under New Regime for salaried persons — a big benefit for middle-income earners
3. File ITR even if zero tax — it helps with loan applications, visa processing, and refund claims
4. Pay advance tax if your total tax liability exceeds ₹10,000 — avoid interest under Section 234B/234C
5. Use official calculator to verify your tax computation before filing

Frequently Asked Questions

What is the difference between FY and AY?

Financial Year (FY) 2025-26 is the year in which you earn income (April 2025 to March 2026). Assessment Year (AY) 2026-27 is the year in which you file the return and your income is assessed.

Is income up to ₹12 lakh completely tax-free?

Under the New Regime, if your taxable income is up to ₹12,00,000, you get full rebate and pay zero tax. For salaried persons, this means gross salary up to ₹12,75,000 (after ₹75,000 standard deduction). This does not apply to special rate income like LTCG.

Do senior citizens get different slabs under the New Regime?

No. The New Tax Regime has uniform slabs for all age groups. The higher basic exemption for senior and super senior citizens applies only under the Old Regime.

What is marginal relief?

If your income slightly exceeds a threshold (like ₹12 lakh for rebate or ₹50 lakh for surcharge), marginal relief ensures your total tax does not exceed the additional income beyond the threshold.

Is cess deductible from income?

No. The 4% health and education cess is not deductible as an expense while computing taxable income.

When is the ITR filing deadline?

For salaried individuals and those without audit requirements: 31 July of the assessment year (i.e., 31 July 2026 for FY 2025-26). For businesses requiring audit: 31 October.

How do I check which regime my employer is using for TDS?

Check your Form 16 Part B or ask your HR/payroll department. You can always change the regime while filing your ITR — the employer's TDS regime is not binding.

This guide is for informational purposes only and is not affiliated with the Income Tax Department of India. Verify all rates on the official Income Tax portal. Tax laws may change — consult a qualified CA for personalized advice.