The Union Budget 2025, presented by Finance Minister Nirmala Sitharaman, introduced significant revisions to the income tax structure under the new tax regime, effective from April 1, 2025, for Financial Year (FY) 2025-26 (Assessment Year or AY 2026-27). These changes aim to provide substantial relief to middle-class taxpayers by widening slabs, increasing the rebate under Section 87A to ₹60,000, and raising the standard deduction to ₹75,000 for salaried individuals. As a result, under the new regime, income up to ₹12 lakh is effectively tax-free, and with the standard deduction, salaried individuals can enjoy zero tax on gross salary up to ₹12.75 lakh.
The new tax regime remains the default option, offering lower rates but fewer deductions (e.g., no HRA, Section 80C, or home loan interest exemptions, except limited ones like employer NPS contributions under 80CCD(2)). The old regime stays unchanged, suitable for those with high deductions. Health and Education Cess remains at 4%, and surcharge rates are capped at 25% in the new regime for incomes above ₹2 crore.
This calculator helps you estimate your tax liability accurately. Below are the updated slabs, followed by a Python-based tool you can run locally for precise calculations, including rebate, cess, and marginal relief where applicable.
Income Tax Slabs for AY 2026-27
New Tax Regime (Default – Section 115BAC)
| Income Slab | Tax Rate |
|---|---|
| Up to ₹4,00,000 | 0% |
| ₹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% |
| Above ₹24,00,000 | 30% |
- Rebate u/s 87A: Full rebate up to ₹60,000 if taxable income ≤ ₹12 lakh (zero tax up to this limit).
- Standard Deduction: ₹75,000 for salary/pension.
- Effective zero tax: Up to ₹12.75 lakh gross salary.
Old Tax Regime
| Income Slab (Below 60 years) | Tax Rate | Senior (60-80 years) | Super Senior (>80 years) |
|---|---|---|---|
| Up to ₹2,50,000 | 0% | Up to ₹3,00,000 | Up to ₹5,00,000 |
| ₹2,50,001 – ₹5,00,000 | 5% | ₹3,00,001 – ₹5,00,000 | ₹5,00,001 – ₹10,00,000 |
| ₹5,00,001 – ₹10,00,000 | 20% | ₹5,00,001 – ₹10,00,000 | Above ₹10,00,000 |
| Above ₹10,00,000 | 30% | Above ₹10,00,000 | 30% |
- Rebate u/s 87A: Up to ₹12,500 if income ≤ ₹5 lakh.
- Deductions: Full access to 80C (₹1.5 lakh), 80D, HRA, etc.
How to Calculate Your Income Tax (Step-by-Step)
- Compute Gross Total Income (salary + other sources).
- Subtract deductions (standard ₹75,000 in new; more in old).
- Apply slabs to taxable income.
- Add 4% Cess.
- Apply rebate if eligible.
- Add surcharge if income > ₹50 lakh.
Official Tools & Links
- Income Tax Department Calculator: incometax.gov.in Calculator
- ClearTax Calculator: cleartax.in Tax Calculator
- Official Slabs: incometaxindia.gov.in Tax Rates
Plan early—opt for the regime while filing ITR by July 31, 2026. Consult a CA for personalized advice. These changes could save up to ₹1.14 lakh for high earners!