New Income Tax Regime AY 2025-26: Finance Minister Nirmala Sitharaman, in her Union Budget 2025 speech, announced a major tax relief for taxpayers, stating that no income tax will be payable on income up to Rs 12 lakh. She emphasized that the new income tax regime is designed to be simpler and more beneficial for the middle class.
Additionally, Sitharaman revealed that income tax slabs and rates are being revised across the board to create a more progressive taxation system. Under the revised New Income Tax Regime 2025, the tax-free income limit extends to Rs 12.75 lakh when factoring in the standard deduction.
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New Income Tax Regime AY 2025-26
| Income Range (Rs in Lakh) | Tax Rate (%) |
| Rs 0 - Rs 4 lakh | Nil |
| Rs 4 lakh - Rs 8 lakh | 5% |
| Rs 8 lakh – Rs 12 lakh | 10% |
| Rs 12 lakh – Rs 16 lakh | 15% |
| Rs 16 lakh – Rs 20 lakh | 20% |
| Rs 20 lakh – Rs 24 lakh | 25% |
| Above Rs 24 lakh | 30% |
You can calculate your exact tax liability and potential savings under the new regime using our Income Tax Calculator.
Income up to Rs 4 lakh will remain completely tax-free (NIL), while those earning between Rs 4 lakh and Rs 8 lakh will be taxed at 5%. For income between Rs 8 lakh and Rs 12 lakh, a 10% tax rate will be applicable, whereas those earning between Rs 12 lakh and Rs 16 lakh will be subject to a 15% tax. Individuals falling in the Rs 16 lakh to Rs 20 lakh bracket will pay 20% tax, while those with income ranging from Rs 20 lakh to Rs 24 lakh will be taxed at 25%. Any income exceeding Rs 24 lakh will attract the highest tax rate of 30%.
Income Tax Slabs Under New Tax Regime AY 2024-25
Taxpayers without business income can opt between the new and old tax regime every financial year. The income tax slabs under the new tax regime are:
| Income Tax Slabs (₹) | Tax Rate (%) |
| Up to 3,00,000 | 0% |
| 3,00,001 – 7,00,000* | 5% |
| 7,00,001 – 10,00,000 | 10% |
| 10,00,001 – 12,00,000 | 15% |
| 12,00,001 – 15,00,000 | 20% |
| Above 15,00,000 | 30% |
A 4% cess will be applied to the total tax amount, with additional surcharges applicable for incomes exceeding Rs 50 lakh.
*Incomes of up to Rs 7 lakh are eligible for rebate of up to Rs 25,000 under the new tax regime.
Income Tax Slab Under Old Tax Regime AY 2024-25
The government has not introduced any revisions in the income tax slabs under the old tax regime. The slabs vary based on the taxpayer’s age, offering different exemption limits for general taxpayers, senior citizens, and super senior citizens.
For Individuals Below 60 Years
| Income Tax Slabs (₹) | Tax Rate (%) |
| Up to 2,50,000 | 0% |
| 2,50,001 – 5,00,000 | 5% |
| 5,00,001 – 10,00,000 | 20% |
| Above 10,00,000 | 30% |
| Income Tax Slabs (₹) | Tax Rate (%) |
| Up to 3,00,000 | 0% |
| 3,00,001 – 5,00,000 | 5% |
| 5,00,001 – 10,00,000 | 20% |
| Above 10,00,000 | 30% |
| Income Tax Slabs (₹) | Tax Rate (%) |
| Up to 5,00,000 | 0% |
| 5,00,001 – 10,00,000 | 20% |
| Above 10,00,000 | 30% |
Taxpayers opting for the old tax regime can continue to avail deductions under:
- Section 80C: Up to Rs 1.5 lakh for investments in PPF, ELSS, LIC, etc.
- Section 80D: Up to Rs 25,000 for health insurance (Rs 50,000 for senior citizens).
- Section 80TTA: Up to Rs 10,000 deduction on interest from savings accounts.
- Section 80CCD(1B): Additional Rs 50,000 deduction on NPS contributions.
- Exemptions on House Rent Allowance (HRA) and Leave Travel Allowance (LTA).
- Under the old tax regime, individuals with taxable income up to Rs 5 lakh qualify for a tax rebate under Section 87A, ensuring zero tax liability.
A surcharge is applicable on high-income taxpayers exceeding certain income thresholds. The applicable surcharge rates are as follows:
Surcharge Under New Tax Regime
| Range of Income (₹) | Surcharge Rate (%) |
| Up to 50 lakh | Nil |
| 50 lakh - 1 crore | 10% |
| 1 crore - 2 crore | 15% |
| Above 2 crore | 25% |
| Range of Income (₹) | Surcharge Rate (%) |
| Up to 50 lakh | Nil |
| 50 lakh - 1 crore | 10% |
| 1 crore - 2 crore | 15% |
| 2 crore - 5 crore | 25% |
| Above 5 crore | 37% |
Under the current income tax laws, individuals who do not have any business income are required to make a choice between the new tax regime and the old tax regime at the beginning of each financial year.
From April 1, 2023, the new tax regime has been set as the default option. This means that unless an individual explicitly opts for the old tax regime, their income tax liability will be computed under the new regime.
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