New Income Tax Slab, Rates for FY 2025-26, AY 2026-27

14-02-2025

10:45 AM

The finance minister of India, Nirmala Sitharaman has announced the changes in the New Income Tax Slabs under new tax regime in Budget 2025. This budget contained significant initiatives across multiple sectors, aiming to promote economic growth, support agriculture, enhance infrastructure, and introduce various reforms. Keep reading the article to have a clear understanding about the New Income Tax Slab Rates.

New Income Tax Slab

The income tax is a direct tax that follows a progressive slab system, where the tax rate increases as income rises. Under the Income-tax Act, 1961, taxpayers choose between two regimes: the new regime and the old regime.

In Budget 2025, the Finance Minister announced no income tax will be payable for income up to ₹12 lakh under the new regime, as the rebate has been increased to ₹60,000. The Direct Tax Code will be presented in Parliament next week to introduce tax reforms. The New Income Tax Slab for the new regime for FY 2025-26 (AY 2026-27) has also been announced.

New Income Tax Slab Features

The New Tax Regime 2025 includes various changes to simplify taxation and provide ease to taxpayers. The New Income Tax Slab Features Includes:

The first ₹3 lakh from the annual income is completely tax-free, offering significant benefits to low-income earners.
New Income Tax Slab ensures a fair distribution of the tax burden.
The new regime simplifies tax calculations, making it easier for individuals to understand and comply with the tax system.

New Income Tax Slab Rates

The New Income Tax Slab Rates under the New Tax Regime for FY 2025–26 introduce updated brackets aimed at reducing the tax burden on middle-income earners. Below shared is the simplified revised tax slabs:

New Income Tax Slab Rates
Income Range (₹)	Tax Rate (%)
Up to ₹4,00,000	NIL
₹4,00,000 – ₹8,00,000	5
₹8,00,000 – ₹12,00,000	10
₹12,00,000 – ₹16,00,000	15
₹16,00,000 – ₹20,00,000	20
₹20,00,000- ₹24,00,000	25
Above 24,00,000	30

New Tax Regime vs Old Tax Regime

Below we have shared the comparison between tha New Tax Regime vs Old Tax Regime:

New Tax Regime vs Old Tax Regime
New Tax Regime	Old Tax Regime
Introduction	Introduced in April 2023	Traditional tax regime existing prior to the new regime
Basic Income Exemption Limit	Rs 3 lakh for all taxpayers	Varies depending on taxpayer category and deductions
Tax Rates and Slabs	More income tax slabs with lower rates	Fewer slabs with comparatively higher rates
Standard Deduction	Rs 50,000 from salary/pension income	Available, but limited to specific categories
Employer’s NPS Contribution	Up to 10% of salary (14% for government employees)	Deductions available for employer’s NPS contribution
Deductions Available	Limited to standard deduction and employer’s NPS contribution	Wide range of deductions under various sections (80C, 80D, etc.)
Flexibility vs. Simplicity	Simplified structure with fewer deductions	Offers flexibility with multiple deductions
Tax Planning Strategies	Requires careful planning due to limited deductions	Offers more options for tax planning and optimization
Long-term Financial Goals	May be suitable for individuals seeking simplicity	Beneficial for those prioritizing tax savings through deductions
Considerations	Individual income level, eligibility for deductions	Long-term financial goals, tax planning objectives

New Income Tax Slab FAQs

Q1. What is the new income tax slab for 2024-25?

Ans. Check out the new income tax slab for 2024-25 in the article above.

Q2. Is the new tax regime slab 2025-26?

Ans. No income tax will be payable on annual income of up to 12 Lakhs.

Q3. What is the new tax rebate for 2024 25?

Ans. Incomes of up to Rs 7 lakh are eligible for rebate of up to Rs 25,000 under the new tax regime.

Q4. Is 7 lakh income tax free?

Ans. The Finance Minister increased the no-tax limit from ₹7 lakh to ₹12 lakh.

Q5. How upto 12 lakh is tax-free?

Ans. No income tax will be payable on annual income of up to 12 Lakhs.