New Income Tax Slabs for FY 2025-26 – Key Changes Explained
Discover the latest income tax slab updates for Financial Year 2025-26. Compare old vs new tax regimes, understand which one suits you better, and plan your taxes effectively with our detailed analysis.
CA Vikram Singh
Chartered Accountant & Tax Expert
Quick Overview
The Government of India has introduced updated income tax slabs for FY 2025-26, affecting millions of taxpayers. Whether you're a salaried employee, freelancer, or business owner, these changes will impact your tax liability and take-home income.
With the Union Budget 2025, significant modifications have been made to income tax structures under both the old and new tax regimes. Understanding these changes is crucial for effective tax planning and maximizing your savings.
₹3 Lakh
Basic Exemption Limit
6 Tax Slabs
Under New Regime
Optional
Regime Selection
Income Tax Slabs for FY 2025-26
New Tax Regime (Default)
| Income Range | Tax Rate | Max Tax |
|---|---|---|
| Up to ₹3,00,000 | Nil | ₹0 |
| ₹3,00,001 - ₹7,00,000 | 5% | ₹20,000 |
| ₹7,00,001 - ₹10,00,000 | 10% | ₹30,000 |
| ₹10,00,001 - ₹12,00,000 | 15% | ₹30,000 |
| ₹12,00,001 - ₹15,00,000 | 20% | ₹60,000 |
| Above ₹15,00,000 | 30% | Variable |
Key Benefits: Lower tax rates, no need to maintain investment proofs, standard deduction of ₹75,000 for salaried employees.
Which Tax Regime Should You Choose?
Choose New Regime If:
- You have minimal investments and deductions
- You don't claim HRA or live in owned house
- Your total deductions are less than ₹75,000
- You prefer simplicity over documentation
Choose Old Regime If:
- You have significant 80C investments (>₹1 lakh)
- You claim HRA exemption regularly
- You have home loan interest deductions
- Your total deductions exceed ₹2 lakhs
Pro Tip: Calculate Both Scenarios
Calculate your tax liability under both regimes annually. Many taxpayers save more with the old regime despite higher rates due to extensive deductions available.
Smart Tax Planning Strategies for 2025-26
Maximize 80C Investments
Invest in ELSS, PPF, EPF, NSC, and tax-saving FDs to claim full ₹1.5 lakh deduction under Section 80C.
Health Insurance Premium
Claim up to ₹25,000 for self/family and additional ₹50,000 for parents under Section 80D.
Home Loan Benefits
Claim principal repayment under 80C and interest deduction up to ₹2 lakhs under 24(b).
Education Loan Interest
Deduct entire interest paid on education loans for higher studies under Section 80E.
HRA Optimization
If living in rented accommodation, claim HRA exemption which can significantly reduce taxable income.
NPS Additional Deduction
Invest in NPS to claim additional ₹50,000 deduction under Section 80CCD(1B).
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Frequently Asked Questions
Key Takeaways
- New regime offers higher basic exemption limit (₹3 lakhs)
- Choose regime based on your deduction eligibility
- Calculate tax under both regimes annually
- Salaried employees can switch regimes yearly
- Plan investments early for maximum tax benefits
- Keep all investment proofs and receipts ready
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