Income Tax Calculation
Income tax in India is progressive: you pay a higher rate only on the income that falls in each higher slab, not on your whole income. The slabs change with each budget, so this page shows the rates for FY 2025-26 (assessment year 2026-27), which also apply to FY 2026-27.
Two regimes
Section titled “Two regimes”You can choose between two tax regimes:
- New tax regime (the default) — lower slab rates, but most deductions and exemptions (80C, HRA, 80D, home-loan interest) are not available.
- Old tax regime — higher slab rates, but you can claim the full set of deductions.
For salaried income, the new regime offers a standard deduction of ₹75,000 and the old regime ₹50,000. You can switch each year when you file, as long as you do not have business income.
New tax regime slabs (FY 2025-26)
Section titled “New tax regime slabs (FY 2025-26)”| Taxable income | Rate |
|---|---|
| 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% |
Under the new regime, taxable income up to ₹12,00,000 is effectively tax-free because of the Section 87A rebate (up to ₹60,000). A salaried person earning up to about ₹12.75 lakh can owe no tax once the ₹75,000 standard deduction is applied.
Old tax regime slabs (FY 2025-26)
Section titled “Old tax regime slabs (FY 2025-26)”| Taxable income | Rate |
|---|---|
| Up to ₹2,50,000 | Nil |
| ₹2,50,001 – ₹5,00,000 | 5% |
| ₹5,00,001 – ₹10,00,000 | 20% |
| Above ₹10,00,000 | 30% |
In the old regime, the basic exemption is higher for senior citizens: ₹3,00,000 for those aged 60–80, and ₹5,00,000 for those aged 80 and above. The Section 87A rebate is ₹12,500, which makes taxable income up to ₹5,00,000 tax-free.
Worked example
Section titled “Worked example”A salaried employee earns ₹15,00,000 and opts for the new regime.
Gross salary ₹15,00,000Less standard deduction ₹75,000Taxable income ₹14,25,000| Slab | Tax |
|---|---|
| Up to ₹4,00,000 @ 0% | Nil |
| ₹4,00,001–₹8,00,000 @ 5% | ₹20,000 |
| ₹8,00,001–₹12,00,000 @ 10% | ₹40,000 |
| ₹12,00,001–₹14,25,000 @ 15% | ₹33,750 |
| Tax before cess | ₹93,750 |
| Health & education cess @ 4% | ₹3,750 |
| Total tax (new regime) | ₹97,500 |
Which regime wins?
Section titled “Which regime wins?”Run both calculations. The new regime usually wins when you have few deductions. The old regime can win when you claim HRA, home-loan interest, 80C, and 80D. Compare the tax after deductions, rebate, and cess for your actual income.