As taxpayers prepare for the transition from the 2025 to 2026 financial year, recapping the income tax slabs and rates under the new and old tax regimes has become increasingly important.
In earlier budgets, particularly in 2025, the government focused on strengthening the appeal of the new tax regime by adjusting slab rates and offering a more streamlined system. While these changes provided relief and clarity under the new regime, the old regime did not receive similar updates, leaving its structure largely unchanged.
Since 2026 is just around the corner, let's look at the income tax slabs and rates
Income tax slab and rates for the new tax regime
Starting from April 1, 2025, income up to ₹12 lakh has become tax-free under the new tax regime. The deductions/exemptions available in the new regime include a standard deduction of ₹75,000 and the employer's contribution towards provident fund and national pension system accounts. However, if your taxable salary is above ₹12 lakh, then you will have to pay tax as per the applicable tax slabs and rates.
Under the new tax regime, income up to ₹4 lakh is fully exempt. From ₹4 lakh to ₹8 lakh, the tax rate is 5%, rising to 10% for earnings between ₹8 lakh and ₹12 lakh. The 15% slab applies to income from ₹12 lakh to ₹16 lakh, followed by 20% for the ₹16-20 lakh bracket. A 25% rate applies to ₹20-24 lakh, and income beyond ₹24 lakh is taxed at 30%.
| Income Range (₹) | Tax Rate |
|---|---|
| ₹0 - ₹4,00,000 | Nil |
| ₹4,00,001 - ₹8,00,000 | 5% |
| ₹8,00,001 - ₹12,00,000 | 10% |
| ₹12,00,001 - ₹16,00,000 | 15% |
| ₹16,00,001 - ₹20,00,000 | 20% |
| ₹20,00,001 - ₹24,00,000 | 25% |
| ₹24,00,001 & above | 30% |
These streamlined slabs are expected to continue guiding taxpayers into FY 2026-27, unless Budget 2025 introduces further refinements.
Income tax slab and rates for the old tax regime
The old tax regime for FY 2025-26 continues to follow its long-established structure: no tax up to ₹2.5 lakh, 5% tax for ₹2.5-5 lakh, 20% for the ₹5-10 lakh range, and 30% for income above ₹10 lakh.
| Income Range (₹) | Tax Rate |
|---|---|
| ₹0 - ₹2,50,000 | Nil |
| ₹2,50,001 - ₹5,00,000 | 5% |
| ₹5,00,001 - ₹10,00,000 | 20% |
| Above ₹10,00,000 | 30% |
While the old tax regime allows numerous deductions, such as Section 80C investments, home-loan benefits, and medical insurance deductions, its higher tax rates often make it less appealing for those with limited eligible deductions.
Since FY 2023-24, the new tax regime has become the default for individuals and HUFs, although switching to the old regime remains an option.
As Budget 2026 approaches, taxpayers are keenly watching for possible tweaks that could further simplify compliance, reduce the burden, or provide relief to specific income groups.
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