Income Tax Slab Rate 2026: Old Regime vs New Regime Compared

New regime slabs (default from FY 2023-24 onward)

Following the revised slabs effective FY 2025-26: income up to ₹4 lakh is nil, ₹4-8 lakh is taxed at 5%, ₹8-12 lakh at 10%, ₹12-16 lakh at 15%, ₹16-20 lakh at 20%, ₹20-24 lakh at 25%, and anything above ₹24 lakh at 30%. A standard deduction of ₹75,000 applies for salaried taxpayers.

The ₹12 lakh rebate — effectively tax-free

Under Section 87A, taxpayers in the new regime with taxable income up to ₹12 lakh (₹12.75 lakh for salaried individuals after the standard deduction) pay zero tax — the rebate wipes out the liability entirely. This is the single biggest reason most salaried taxpayers now default to the new regime.

Old regime slabs

The old regime is unchanged: nil up to ₹2.5 lakh, 5% from ₹2.5-5 lakh, 20% from ₹5-10 lakh, and 30% above ₹10 lakh, with a Section 87A rebate that zeroes out tax up to ₹5 lakh taxable income. It remains available only if you actively opt for it, and it's the only regime that lets you claim HRA, 80C, home loan interest and most other deductions.

Which regime should you pick?

If your deductions (80C, 80D, HRA, home loan interest) comfortably exceed roughly ₹4-4.5 lakh, the old regime often still wins. If you don't have significant deductions to claim, the new regime's lower slabs and ₹12 lakh rebate usually come out ahead. The only reliable way to know is to compute both and compare — which is exactly what we do before filing.

FAQs

Can I switch regimes every year? Salaried individuals can switch between old and new regime every year when filing their return. Those with business income have a more restricted, one-time switch-back option.

Does the new regime allow any deductions at all? Yes — employer's NPS contribution (80CCD(2)), standard deduction, and a few others remain available even in the new regime.