Income Tax Slabs FY 2025-26: How Your Tax Is Actually Computed
Written by lemmatools Editorial Team · Last updated: · 7 min read
The FY 2025-26 new-regime slabs
- ₹0 – ₹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% — plus 4% health & education cess on the tax.
Slabs are marginal: only the income inside each band is taxed at that band’s rate. Salaried taxpayers first subtract the ₹75,000 standard deduction from gross salary, and the section 87A rebate then wipes the tax entirely if taxable income is ₹12 lakh or less — which is why "zero tax up to ₹12.75 lakh salary" is the correct soundbite for FY 2025-26.
Worked example: ₹15 lakh taxable income
- First ₹4L: nil.
- ₹4–8L: ₹4L × 5% = ₹20,000.
- ₹8–12L: ₹4L × 10% = ₹40,000.
- ₹12–15L: ₹3L × 15% = ₹45,000.
- Tax ₹1,05,000 + 4% cess = ₹1,09,200. Effective rate: just 7.3% of income.
Notice the gap between the top marginal rate you touch (15%) and the effective rate you pay (7.3%) — slab systems are gentler than they look, and most "30% bracket" earners pay well under 20% effectively.
The ₹12 lakh cliff and marginal relief
At exactly ₹12,00,000 of taxable income the 87A rebate cancels the entire ₹60,000 slab tax. At ₹12,00,001 the rebate vanishes. To stop one extra rupee costing ₹60,000, the law provides marginal relief: tax is capped at the amount by which income exceeds ₹12 lakh, until the normal computation takes over (around ₹12.75L). If your income sits in this band, salary structuring — shifting ₹20,000 into employer NPS under 80CCD(2), for example — has an absurdly high return.
Old regime: when it still matters
The old regime (2.5L/5L/10L slabs at 5%/20%/30%, ₹12,500 rebate up to ₹5L) survives for those who opt in, and it wins only when deductions are heavy: big HRA, ₹2L home-loan interest, maxed 80C and 80D can together beat the new regime above roughly ₹3.5–4L of combined deductions. The income tax calculator computes both side by side — check yearly, because your rent, loan and the slabs themselves all move.