Income Tax Slabs for FY 2025-26 (AY 2026-27): Old vs New Regime

Tax slabs decide how much of your income is taxed at each rate as it rises, not a single flat rate applied to your whole income. Here's the full breakdown for FY 2025-26 (AY 2026-27), under both regimes, with a worked example showing how it actually adds up.

New tax regime slabs (default for FY 2025-26)

The new regime is the default, you're filed under it automatically unless you actively opt for the old regime. A ₹75,000 standard deduction applies for salaried individuals, and the Section 87A rebate brings tax down to zero for taxable income up to ₹12 lakh (₹12.75 lakh for salaried filers, after the standard deduction).

Old tax regime slabs

The old regime's basic exemption is lower, and its slabs jump more steeply, but it allows deductions the new regime doesn't: 80C, 80D, HRA, and home loan interest among them. A ₹50,000 standard deduction applies for salaried individuals here too.

A worked example: how slab tax is actually calculated

Say your taxable income under the new regime is ₹10 lakh. Tax isn't 10% of the whole ₹10 lakh, only the portion inside each slab is taxed at that slab's rate:

Add the 4% cess (₹1,600) and the pre-cess total is ₹41,600. But since taxable income here is under the ₹12 lakh threshold, the Section 87A rebate brings this down to zero, this specific example ends up owing nothing, despite the slab math producing a real number along the way.

Why the slab structure still matters even with the rebate

Even when the 87A rebate zeroes out tax below ₹12 lakh, the slab structure still determines what happens above that threshold, and it's what your employer's TDS calculation is actually built on throughout the year. Understanding the slabs also matters for comparing the old and new regimes properly: a like-for-like comparison needs the real slab-by-slab tax under each, not just the headline exemption limit. For that full comparison, see do you actually need to pay income tax.

This article is educational and not personalised financial advice. Slab rates referenced here reflect the position as of FY 2025-26 per the Income Tax Department; always confirm current rates there before filing.