Maximizing Savings in 2026: India's New Income Tax Slabs Explained

The Union Budget 2025 introduced major revisions to the New Tax Regime slabs for the Financial Year 2025-26 (Assessment Year 2026-27). This post breaks down how the new tax brackets work and how salaried individuals can optimize their savings.

The New Tax Regime Slab Structure (FY 2025-26)

Under the new rules, the tax-free basic exemption limit was increased to ₹4 Lakhs. The new slabs are as follows:

• ₹0 to ₹4 Lakhs: Nil
• ₹4 Lakhs to ₹8 Lakhs: 5%
• ₹8 Lakhs to ₹12 Lakhs: 10%
• ₹12 Lakhs to ₹16 Lakhs: 15%
• ₹16 Lakhs to ₹20 Lakhs: 20%
• ₹20 Lakhs to ₹24 Lakhs: 25%
• Above ₹24 Lakhs: 30%

Standard Deduction and Section 87A Rebate

For salaried employees, the Standard Deduction has been set at ₹75,000. Additionally, the Section 87A tax rebate has been extended, meaning that taxpayers with net taxable income up to ₹12 Lakhs pay zero income tax in the New Tax Regime. Salaried employees with gross income up to ₹12.75 Lakhs can enjoy completely tax-free income.