Income Tax Rules for FY 2025-26: New-Regime Slabs and Rebate

For AY 2026-27 (normally income earned in FY 2025-26), the Income Tax Department lists new-regime slabs from nil tax up to ₹4 lakh to 30% above ₹24 lakh. It also lists a section 87A rebate of up to ₹60,000 where total income does not exceed ₹12 lakh, subject to statutory conditions. These are not FY 2026-27 slabs.

What are the official new-regime slabs for AY 2026-27?

Total income	Rate on income in that band
Up to ₹4,00,000	Nil
₹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%

Health and education cess is 4% on income tax plus surcharge, where applicable. The table is a rate table, not a complete tax calculation: special-rate income, surcharge, marginal relief and deductions can matter.

How does the section 87A rebate work in this year?

The department states that, from AY 2026-27, the maximum new-regime rebate is ₹60,000 where total income does not exceed ₹12 lakh. The rebate does not mean that every person with a particular salary has no tax: taxable income, the type of income and applicable conditions must be checked.

For example, a person with ₹11,80,000 of total income does not calculate tax by applying a single 10% rate to the whole amount. The slab rates apply band by band; the applicable rebate is then considered under the law. This is an illustration of the sequence, not a filing computation.

Can you choose between the old and new regimes?

The new regime is the default under section 115BAC. The Income Tax Department says that a person without business or professional income may exercise the option each year in the return filed by the due date. A person with business or professional income faces separate Form 10-IEA and re-entry rules.

Do not use a fixed deduction threshold as a shortcut for choosing a regime. Compare the actual deductions and exemptions available to you, the nature of your income, and the current rules. Verify the latest Income-tax provisions or consult a CA before filing.

What this article does not claim

This page does not state changes to the standard deduction, section 80C, employer NPS treatment or capital-gains rates for FY 2026-27 because those claims need the legislation or official instructions that apply to that year. Check the current official material before making payroll declarations or filing a return.

Frequently asked questions

Which financial year do these new-regime slabs cover?

These are the Income Tax Department's slabs for AY 2026-27, which normally corresponds to income earned in FY 2025-26. Do not apply them automatically to FY 2026-27 income.

What is the section 87A rebate threshold in the new regime for AY 2026-27?

The department says the new-regime rebate is up to ₹60,000 where total income does not exceed ₹12 lakh, subject to the law's conditions. Special-rate income and other facts can change the result.

Can a salaried person choose the old regime each year?

The department says individuals without business or professional income can exercise the option each year in the return filed by the applicable due date. Business or professional income has separate Form 10-IEA rules.

Sources

1. Income Tax Department: AY 2026-27 rates and rebate for the new tax regime Income Tax Department checked 23 August 2026
2. Income Tax Department: individual/HUF regime choice and tax slabs for AY 2026-27 Income Tax Department checked 23 August 2026

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