If you’re a salaried employee in India, “income tax” is probably one of those things that pinches every year. You see your salary credited, and then—boom!—the deductions show up. But here’s the good news: once you understand the latest tax slabs and the two regimes (old vs new), you can make smarter choices and save money.
In this post, we’ll break down the latest income tax slabs for FY 2025-26 (AY 2026-27) in a simple, no-jargon way.
🧾 The Two Tax Regimes: Old vs New
Since 2020, salaried employees have had two options to file their taxes:
- Old Regime – Higher tax rates, but you get deductions (like 80C, 80D, HRA, etc.).
- New Regime – Lower tax rates, but no major deductions (except standard deduction).
So, the choice depends on your salary structure and how much you invest in tax-saving investments.
📉 Income Tax Slabs for FY 2025-26 (New Regime)
Under the new tax regime (default option from FY 2023-24), here are the slabs:
| Income Range | Tax Rate |
|---|---|
| Up to ₹3,00,000 | Nil |
| ₹3,00,001 – ₹6,00,000 | 5% |
| ₹6,00,001 – ₹9,00,000 | 10% |
| ₹9,00,001 – ₹12,00,000 | 15% |
| ₹12,00,001 – ₹15,00,000 | 20% |
| Above ₹15,00,000 | 30% |
✅ Standard Deduction of ₹75,000 is available for salaried employees (increased in Budget 2025).
So, if your annual salary is ₹9 lakhs, you first subtract the ₹75,000 standard deduction → taxable income = ₹8.25 lakhs. That means you fall in the 10% + 15% slabs.
📈 Income Tax Slabs for FY 2025-26 (Old Regime)
The old regime is still available if you choose it.
| Income Range | Tax 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, you can claim deductions like:
- Section 80C (up to ₹1.5 lakh – PPF, ELSS funds, LIC, EPF, etc.)
- Section 80D (health insurance premium)
- HRA, LTA, Home Loan Interest (80EEA), etc.
This makes sense if you are already investing in these instruments or paying EMIs.
🤔 Which Regime Should a Salaried Employee Choose?
Here’s a simple thumb rule:
- If you don’t invest much in tax-saving investments → New Regime is better (lower slabs, less paperwork).
- If you already invest ₹1.5L+ in 80C, pay insurance, home loan EMIs, etc. → Old Regime may save you more.
For example:
- Raj earns ₹10 lakhs annually but doesn’t invest → New Regime is better.
- Priya earns ₹10 lakhs annually but invests ₹1.5L in PPF, pays ₹25k in health insurance, and pays home loan interest → Old Regime works better.
💡 Tips for Salaried Employees
- Use employer benefits wisely – HRA, food coupons, and PF contributions can reduce tax.
- Don’t just invest to save tax – Choose investments that also match your long-term goals (retirement, kids, etc.).
- Recalculate every year – Salaries, tax laws, and deductions change, so review before filing.
- Use online calculators – Almost every tax portal has free tools to compare old vs new regimes.
✅ Final Thoughts
Income tax doesn’t have to be scary. Once you know the slabs and deductions, it’s just about choosing the smarter regime for your situation. For salaried employees in FY 2025-26, the new regime is default, but you can still opt for the old regime if it saves you more.
👉 Before filing, run both scenarios (old vs new) and see which one helps you keep more money in your pocket.
💬 Question for You:
Which tax regime are you planning to choose this year – old or new? Drop your thoughts in the comments below 👇
About the Author
