Income Tax Slab Alterations for FY 2025–26: All You Need to Know

byDilip PrasadLast Updated: May 19, 2025

Ready to optimise your taxes this year? Compare both regimes and choose the best fit based on the updated income tax slabs in India for FY 2025–26.

New Income Tax Slab Rate

With the new financial year underway, it’s essential for taxpayers to understand the income tax slab changes for FY 2025–26. Whether you’re a salaried employee, business owner, or senior citizen, being aware of the latest income tax slab helps you plan better and avoid surprises during filing.

India continues with the two-regime tax system — the old regime, which allows multiple deductions and exemptions, and the new regime, which offers lower tax rates but fewer tax-saving options. You can choose either based on which offers you more benefits.

New Income Tax Slab for FY 2025–26 (AY 2026–27)

(As per the new regime, which is now the default)

This applies to all individuals, including salaried workers and pensioners, who opt for the income tax slabs new regime.

Key Features of the New Tax Regime for FY 2025-26

The new income tax regime comes with a simplified structure and uniformity across taxpayer categories. The following features apply exclusively under the new regime:

  • Uniform Tax Rates: The tax rates under the new tax regime are the same for all individuals, including senior citizens and super senior citizens.
  • Tax Rebate: A rebate of up to ₹25,000 is available if the total income does not exceed ₹7,00,000. This income tax rebate is not applicable to NRIs.
  • Standard Deduction: Salaried employees are eligible for a standard deduction of ₹75,000 under the new regime.
  • Family Pension Deduction: The deduction limit under family pension income has been increased from ₹15,000 to ₹25,000.
  • NPS Contribution Deduction: The employer’s contribution towards the National Pension System (NPS) is deductible up to 14% of salary for FY 2025-26.
  • Surcharge Rate: The highest income tax surcharge under the new tax regime is 25%, reduced from 37% in the old regime.
  • Default Tax Regime: The new regime is now the default income tax regime, unless a taxpayer chooses to opt for the old one.

Old Regime: Still Available for Those Claiming Deductions

Income Tax Slab For Individuals Below 60 Years

The old regime continues to support those who want to claim deductions under sections like 80C, 80D, and exemptions like HRA.

Income Tax Slab for Senior Citizens (60 to 79 Years)

Income Tax Slab for Super Senior Citizens (80 Years and Above)

The income tax slab for senior citizens above 60 years makes retirement less taxing, literally.

FAQs

Is it mandatory to opt for the new tax regime while filing ITR for AY 2025-26?

No, it is not mandatory. Taxpayers have the option to choose between the old tax regime and the new tax regime while filing their income tax returns for Assessment Year 2025-26. If you wish to claim deductions, exemptions, or carry forward losses, you must actively opt out of the new regime and select the old one. Otherwise, the new tax regime will be applied by default.

What is the rebate under Section 87A of the Income Tax Act?

Section 87A offers an income tax rebate to individuals earning below a certain threshold. For FY 2024-25, the rebate limit is:
  • Up to ₹7 lakh under the new tax regime
  • Up to ₹5 lakh under the old tax regime
If your total income is within these limits, your tax liability will be reduced to zero.

Is House Rent Allowance (HRA) exemption allowed under the new tax regime?

No, HRA exemption under Section 10(13A) is not permitted in the new tax regime. To claim HRA benefits, you must choose the old regime.

Can I save tax under the new income tax regime?

Yes, you can save tax under the new tax regime, especially with the revised income tax slabs introduced in Budget 2024 for FY 2024-25. Taxpayers opting for the new regime could benefit from savings of up to ₹17,500, depending on their income level.

What are the income tax slab rates for salaried individuals for AY 2025-26?

For Assessment Year 2025-26, salaried employees are taxed under the same income tax slabs as all other individual taxpayers. Slab rates vary between the old and new regimes and should be reviewed to make an informed choice.

How is the age of a senior citizen calculated for income tax in India?

To determine your eligibility as a senior citizen (60 years or older) or super senior citizen (80 years or older) for income tax purposes in India, compare your date of birth with April 1, 2025 (the beginning of the assessment year). If you’ve completed the required age by this date, you fall under the respective senior citizen category.
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