Income Tax Slabs 2025-26: New vs Old Regime Comparison
- Income Tax Act 2025 effective April 1, 2026. Section 115BAC renumbered as Section 202.
- New regime slabs: Zero up to Rs 4 lakh, 5% up to Rs 8 lakh, scaling up to 30% above Rs 24 lakh.
- Old regime slabs unchanged: Zero up to Rs 2.5 lakh, 30% above Rs 10 lakh.
- Section 87A rebate makes tax effectively zero up to Rs 12 lakh under the new regime for FY 2025-26.
The Income Tax Act 2025 takes effect from April 1, 2026. The new tax regime (previously Section 115BAC, now Section 202) remains the default for all individual taxpayers. Here is the complete slab comparison for FY 2025-26.
New Tax Regime Slabs: Section 202 (Default)
The new regime is the default for all individuals since FY 2023-24. You are in this regime unless you specifically opt out.
- Up to Rs 4,00,000: Nil
- Rs 4,00,001 to Rs 8,00,000: 5%
- Rs 8,00,001 to Rs 12,00,000: 10%
- Rs 12,00,001 to Rs 16,00,000: 15%
- Rs 16,00,001 to Rs 20,00,000: 20%
- Rs 20,00,001 to Rs 24,00,000: 25%
- Above Rs 24,00,000: 30%
Standard deduction: Rs 75,000 (Section 19 of the new act)
Rebate under Section 156 (old Section 87A): Individuals with taxable income up to Rs 12,00,000 pay zero tax. Effective tax-free income is Rs 12,75,000 (including standard deduction).
Old Tax Regime Slabs
Opt for the old regime if your total deductions (80C, 80D, HRA, home loan interest, etc.) make it more beneficial.
- Up to Rs 2,50,000: Nil
- Rs 2,50,001 to Rs 5,00,000: 5%
- Rs 5,00,001 to Rs 10,00,000: 20%
- Above Rs 10,00,000: 30%
Standard deduction: Rs 50,000
Rebate under Section 156: Individuals with taxable income up to Rs 5,00,000 pay zero tax.
Which Regime Is Better? Decision Framework
Low deductions, income below Rs 12L
Total deductions under Rs 3.75L. No home loan or major HRA claim. Income below Rs 12L (Section 156 rebate makes tax zero). Want simplicity over locking funds in 80C / 80D.
Heavy deductions, home loan, big HRA
Metro HRA, home loan interest above Rs 1.5L, full Section 123 (Rs 1.5L), full Section 126, NPS additional Rs 50K. Total deductions above Rs 3.75 to 4 lakh.
Worked Example: Rs 15 Lakh Income
New Regime (No Deductions)
Gross income: Rs 15,00,000. After standard deduction (Rs 75,000): Taxable income Rs 14,25,000.
- First Rs 4,00,000: Nil
- Next Rs 4,00,000 at 5%: Rs 20,000
- Next Rs 4,00,000 at 10%: Rs 40,000
- Remaining Rs 2,25,000 at 15%: Rs 33,750
Total tax: Rs 93,750 (+ 4% cess = Rs 97,500)
Old Regime (With Rs 4 Lakh Deductions)
Gross income: Rs 15,00,000. After standard deduction (Rs 50,000) and deductions (Rs 4,00,000): Taxable income Rs 10,50,000.
- First Rs 2,50,000: Nil
- Next Rs 2,50,000 at 5%: Rs 12,500
- Next Rs 5,00,000 at 20%: Rs 1,00,000
- Remaining Rs 50,000 at 30%: Rs 15,000
Total tax: Rs 1,27,500 (+ 4% cess = Rs 1,32,600)
In this example, the new regime saves Rs 35,100 even with Rs 4 lakh in deductions. The breakeven is approximately Rs 4.5 lakh in deductions at the Rs 15 lakh income level.
Key Section Number Changes
The Income Tax Act 2025 reorganises section numbers and structure. Tax rates, slabs, and regime rules for FY 2025-26 are unchanged. Slabs above apply under both the old (1961) and new (2025) acts.
Frequently Asked Questions
What is the tax-free income limit in the new regime for 2025-26?
Under the new regime, income up to Rs 12 lakh is effectively tax-free due to the Section 156 rebate (old 87A). With the Rs 75,000 standard deduction, the tax-free limit reaches Rs 12,75,000.
Which tax regime is better for a salary of Rs 15 lakh?
For Rs 15 lakh salary, the new regime is usually better unless your total deductions exceed Rs 4.5 lakh. With Rs 4 lakh in deductions, the new regime still saves about Rs 35,000 more.
Can I switch between old and new tax regime every year?
Salaried individuals can switch between regimes every year. Business owners and professionals who opt out of the new regime can switch back only once in their lifetime.
What is the standard deduction in the new tax regime?
The standard deduction under the new tax regime is Rs 75,000 for FY 2025-26. Under the old regime, it is Rs 50,000.
For a deeper old-vs-new regime walkthrough with examples, see new regime vs old regime. For the Section 156 rebate specifically, see our New Income Tax Act 2025 hub.
Disclaimer: This article provides general information about the Income Tax Act 2025 and is not tax advice. Consult a qualified Chartered Accountant for advice specific to your situation.
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