Income Tax · New Regime
New Regime Tax Slab (India, 2026)
The new tax regime is now the default way salary and small-business income is taxed in India, and for FY 2025-26 the slabs were widened again so that most middle income earners pay far less. This guide sets out the current slab rates, the standard deduction you still get on salary, the rebate that can take your tax to zero, and the simple test for whether the old regime is still better for you.
- Default regime: the new regime under section 115BAC applies unless you opt out.
- Nil tax: for FY 2025-26, income up to Rs 12,00,000 is tax free in the new regime after the section 87A rebate.
- Standard deduction: Rs 75,000 on salary in the new regime, given automatically.
- Top rate: 30% applies on income above Rs 24,00,000, plus 4% cess and any surcharge.
- Deductions: most of 80C, 80D, HRA and home loan interest are not allowed in the new regime.
- Best choice: depends on your deductions; calculate tax both ways before deciding.
01New regime slab rates for FY 2025-26
The slab rates below apply to the financial year 2025-26, that is the income you earn between 1 April 2025 and 31 March 2026, which you report in the return for assessment year 2026-27. The new regime is governed by section 115BAC of the Income-tax Act and is the default unless you opt out.
| Total income (FY 2025-26) | Tax rate (new regime) |
|---|---|
| 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% |
These are slab rates, so each band is taxed only on the income that falls inside it, not your whole income. A health and education cess of 4% is added on top of the tax, and a surcharge applies at higher income levels, as notified.
02Standard deduction and the section 87A rebate
Two things make the new regime much softer than the raw slabs suggest.
Standard deduction
Salaried people and pensioners get a flat standard deduction from salary in the new regime, which for FY 2025-26 is Rs 75,000. You do not need bills or proof for it; it is given automatically. For the detail of this deduction, see the standard deduction under section 16(ia).
Section 87A rebate
Under the new regime for FY 2025-26, a resident individual with total income up to Rs 12,00,000 pays no tax, because the section 87A rebate cancels the tax on that income. Add the Rs 75,000 standard deduction and a salaried person earning up to about Rs 12,75,000 can end up with nil tax.
Just above the limit
If your income is a little over Rs 12,00,000, marginal relief limits the extra tax so you are not worse off than someone at exactly Rs 12,00,000. The rebate itself does not apply once you cross the limit; marginal relief only softens the jump.
03What you give up in the new regime
The lower slabs come at a cost: most of the old deductions and exemptions are switched off. This table shows the common ones.
| Deduction or exemption | Available in new regime? |
|---|---|
| Standard deduction on salary (Rs 75,000) | Yes |
| Employer NPS contribution, section 80CCD(2) | Yes |
| Section 80C (PPF, ELSS, LIC, EPF, tuition) | No |
| Section 80D (health insurance premium) | No |
| HRA and LTA exemption | No |
| Home loan interest on a self-occupied house | No |
So the new regime suits people who do not claim many deductions. The old regime can still win if you have a home loan, large 80C investments, health insurance, and HRA together.
04New regime or old regime: a quick test
The old regime keeps its older, narrower slabs (nil up to Rs 2,50,000, then 5%, 20% and 30%) but lets you claim the full set of deductions. A simple way to decide:
- Add up your likely deductions for the year: 80C, 80D, HRA, home loan interest, and so on.
- If they are small (say under Rs 2,00,000 to Rs 2,50,000 in total), the new regime usually gives less tax.
- If they are large, run both regimes and compare. A home loan plus a full 80C plus HRA often tips it towards the old regime.
The only honest way to be sure is to calculate your tax both ways on your real numbers. A ready reckoner is the income tax calculator for the new regime.
The new regime gives lower rates to people who do not claim much; the old regime rewards people who do. Run both on your own figures before you decide.
05How to choose and switch
Because the new regime is the default, you do not need to do anything to stay in it. To use the old regime, you opt out when you file your return.
- Salaried people with no business income can switch between the two regimes every year at the time of filing.
- People with business or professional income have tighter rules on switching back, so plan before you choose. Opting out of the new regime for business income is done by filing the prescribed form, as notified.
- Tell your employer your choice at the start of the year so the right amount of TDS is deducted from your salary. You can still change the final choice when you file.
Section references here follow the Income-tax Act. The Income-tax Act, 2025 is set to replace the 1961 Act, so confirm the section numbers for the assessment year you are filing.
06How Claw Tax helps
Claw Tax and Accounts is an online tax, GST and accounting service for India that connects you with a verified chartered accountant at a fixed, published price, with a Claw reviewer checking every filing before it is submitted.
Choosing a regime and filing your return is something you can do yourself for free on the income tax portal, and for a straightforward salary that is often the right call. Claw Tax is for when you want a verified chartered accountant to run both regimes on your actual numbers, pick the one that costs you less, and file it correctly.
You pick an ITR service at a fixed, published price (salaried ITR filing starts from Rs 499, see the page), a verified CA prepares the return, a Claw reviewer checks it before submission, and you get reminders before the next due date. You can see the fixed prices and start at clawlaw.in/tax.
This is general information, not tax advice; a verified CA handles the specifics of your case.
07Frequently asked questions
What are the new regime slab rates for FY 2025-26?
For FY 2025-26 (AY 2026-27), the new regime charges nil up to Rs 4,00,000, 5% from Rs 4,00,001 to Rs 8,00,000, 10% up to Rs 12,00,000, 15% up to Rs 16,00,000, 20% up to Rs 20,00,000, 25% up to Rs 24,00,000, and 30% above that. A 4% cess and any surcharge are added. Confirm the current slabs on incometax.gov.in before you rely on them.
Is income up to Rs 12 lakh really tax free in the new regime?
Yes, for FY 2025-26 a resident individual with total income up to Rs 12,00,000 pays no tax in the new regime because the section 87A rebate removes the tax on that income. A salaried person also gets the Rs 75,000 standard deduction on top, so the effective nil-tax salary is around Rs 12,75,000.
Can I still claim 80C and HRA in the new regime?
No. The new regime does not allow most deductions and exemptions, including 80C investments, 80D health insurance, HRA and home loan interest on a self-occupied house. You do keep the standard deduction on salary and the employer NPS contribution under 80CCD(2).
Is the new regime better than the old regime for me?
It depends on how much you claim. If your total deductions are small, the new regime usually gives lower tax. If you have a home loan, a full 80C, health insurance and HRA, the old regime can still win. Calculate your tax under both regimes on your own numbers before choosing.
Do I have to tell the tax department which regime I am using?
The new regime is the default, so you do not need to do anything to use it. To use the old regime you opt out when you file your return. Salaried people without business income can switch each year; people with business income face tighter rules on switching back.
Will the section numbers change under the Income-tax Act 2025?
The Income-tax Act, 2025 is set to replace the 1961 Act, and section numbering may change even though the slab structure stays similar. Always confirm the exact section and the assessment year for the return you are filing, since references like 115BAC and 87A may be renumbered.