Income Tax Slabs FY 2025-26: New and Old Regime

Understanding income tax slabs is essential for effective tax planning and accurate income tax return filing. For income tax slab 2025 26 (AY 2026-27), taxpayers can choose between the old tax regime and the new tax regime, depending on which option suits their financial situation better.

This guide explains the income tax slabs applicable for FY 2025-26, the key differences between the two regimes, and the provisions of Section 87A that can significantly reduce tax liability.

Quick Update: Income Tax Act 2025

From April 1, 2026, the Income Tax Act of 1961 has been replaced by the Income Tax Act of 2025. The new tax rules will be applicable from the financial year 2026-27. This means that for the current year, 2025-26, you can still refer to the earlier forms and procedures. Here are a few changes to note:

What are Income Tax Slabs?

Income tax slabs in India refer to predefined income ranges on which different tax rates are applied. The Indian income tax system follows a progressive taxation structure, meaning tax rates increase as taxable income rises.

Under this system, different portions of income are taxed at different rates rather than taxing the entire income at a single rate. The applicable tax rate depends on the tax regime selected by the taxpayer.

Income tax slabs help determine:

• Total tax liability
• Eligibility for tax rebates
• Benefits available under a chosen tax regime
• Tax planning opportunities during the financial year

Income Tax Slabs for FY 2025-26

For Assessment Year 2026-27, corresponding to Financial Year 2025-26, taxpayers must calculate taxes based on the revised income tax slab structure announced for the year.

One of the most significant aspects of FY 2025-26 is the continued emphasis on the new tax regime as the default option. The regime provides lower tax rates across multiple income brackets and offers a higher rebate threshold under Section 87A.

At the same time, taxpayers who benefit from deductions and exemptions such as House Rent Allowance (HRA), Section 80C investments, and health insurance deductions under Section 80D may still find the old tax regime more beneficial.

New Tax Regime for Income Tax Slabs FY 2025-26

The new tax regime under Section 115BAC is the default tax regime for FY 2025-26. It offers lower tax rates but limits access to most deductions and exemptions.

New Tax Regime Slabs FY 2025-26

Key Features of the New Tax Regime

• The regime is the default option for taxpayers.
• Salaried employees can claim a standard deduction of ₹75,000.
• Most exemptions and deductions, including HRA, Section 80C, and Section 80D benefits, are not available.
• A rebate u/S 87A can make taxable income up to ₹12 lakh effectively tax-free, subject to applicable conditions.
• The structure is designed to simplify tax calculations and reduce compliance requirements.

Old Tax Regime for Income Tax Slabs FY 2025-26

The old regime tax slabs continue to remain available as an alternative option. Although tax rates are higher, taxpayers can claim several deductions and exemptions that may lower their overall tax liability.

Old Tax Regime Slabs FY 2025-26

Key Features of the Old Tax Regime

• Salaried individuals can claim a standard deduction of ₹50,000.
• Various deductions and exemptions are available under the Income Tax Act.
• Tax-saving investments under Section 80C can be claimed.
• Deductions for health insurance premiums under Section 80D are permitted.
• House Rent Allowance (HRA) and other eligible exemptions can be claimed.
• Senior citizens receive a basic exemption limit of ₹3 lakh.
• Super senior citizens receive a basic exemption limit of ₹5 lakh.
• Taxable income up to ₹5 lakh can become tax-free through the rebate available under Section 87A.

Section 87A: What You Must Know

Section 87A provides a tax rebate that reduces the final tax liability of eligible resident individuals. The rebate differs under the two tax regimes.

Under the New Tax Regime

• Maximum rebate available: ₹60,000
• Income up to ₹12 lakh can effectively become tax-free.

Under the Old Tax Regime

• Maximum rebate available: ₹12,500
• Income up to ₹5 lakh can effectively become tax-free.

Important Points About Section 87A

• The rebate is available only to eligible resident individuals.
• It is applied after calculating income tax liability.
• The rebate cannot exceed the actual tax payable.
• Income taxed at special rates, including certain capital gains covered under Sections 111A and 112A, is not eligible for rebate benefits.

How Jio Finance Helps Simplify Tax Planning?

Managing taxes involves more than simply filing an income tax return. It requires keeping financial information organised and maintaining visibility over investments and transactions throughout the year.

Jio Finance can support financial planning by helping you:

• Access multiple financial solutions through a single digital platform.
• Track investments and financial activities more efficiently.
• Maintain better visibility over financial records required for tax preparation.
• Monitor financial information in an organised manner throughout the year.
• Stay prepared with relevant financial details when filing income tax returns.
• Simplify overall financial management through a digital-first approach.

To Sum Up

Income tax slabs play an important role in determining the tax liability of every taxpayer. For FY 2025-26, both the old and new tax regimes remain available, each offering distinct advantages. Before filing an income tax return, you should compare both regimes carefully and evaluate which option results in a lower tax liability based on your income profile and eligible deductions. A well-informed choice can help optimise tax savings and improve overall financial planning.