New Tax Regime FY 2025-26 — Revised Slabs, ₹60,000 Rebate & Zero Tax up to ₹12.75 Lakh
Updated: 3 June 2026 | FY 2025-26 / AY 2026-27 | Budget 2025 | Income-tax Act, 2025
Budget 2025 made the biggest overhaul to the new tax regime. Slabs revised: ₹0–4L: 0%, ₹4–8L: 5%, ₹8–12L: 10%, ₹12–16L: 15%, ₹16–20L: 20%, ₹20–24L: 25%, above ₹24L: 30%. Section 87A rebate raised to ₹60,000 (income ≤ ₹12L → zero tax). Standard deduction: ₹75,000. Net result: salaried persons earning up to ₹12.75 lakh pay zero income tax — no investments required.
₹60,000
Section 87A rebate in new regime FY 2025-26 — doubled from ₹25,000 in Budget 2025.
Income ≤ ₹12L → tax = ₹60,000 → rebate = ₹60,000 → net tax = ₹0. Salaried: ₹12.75L gross − ₹75K std deduction = ₹12L taxable → zero tax.
Income ≤ ₹12L → tax = ₹60,000 → rebate = ₹60,000 → net tax = ₹0. Salaried: ₹12.75L gross − ₹75K std deduction = ₹12L taxable → zero tax.
New Regime Slabs FY 2025-26 — Full Calculation
| Income Range | Tax Rate | Tax on This Slab | Cumulative Tax |
|---|---|---|---|
| ₹0 – ₹4,00,000 | 0% | ₹0 | ₹0 |
| ₹4,00,001 – ₹8,00,000 | 5% | ₹20,000 | ₹20,000 |
| ₹8,00,001 – ₹12,00,000 | 10% | ₹40,000 | ₹60,000 |
| ₹12,00,001 – ₹16,00,000 | 15% | ₹60,000 | ₹1,20,000 |
| ₹16,00,001 – ₹20,00,000 | 20% | ₹80,000 | ₹2,00,000 |
| ₹20,00,001 – ₹24,00,000 | 25% | ₹1,00,000 | ₹3,00,000 |
| Above ₹24,00,000 | 30% | — | — |
Note: Add 4% Health & Education Cess on total tax. Surcharge applies on income above ₹50 lakh. Section 87A rebate of ₹60,000 wipes out full tax liability for income ≤ ₹12L.
New Regime vs Old Regime — FY 2025-26 Comparison
| Feature | New Regime | Old Regime |
|---|---|---|
| Basic exemption limit | ₹3,00,000 | ₹2,50,000 |
| Tax-free income (rebate) | ₹12,00,000 (87A = ₹60,000) | ₹5,00,000 (87A = ₹12,500) |
| Standard deduction | ₹75,000 (salaried) | ₹50,000 (salaried) |
| Salaried zero-tax limit | ₹12,75,000 gross | ₹5,50,000 gross |
| 80C deduction (₹1.5L) | Not allowed | Allowed |
| HRA exemption | Not allowed | Allowed |
| Home loan interest (₹2L) | Not allowed | Allowed (self-occupied) |
| 80D (health insurance) | Not allowed | Allowed |
| NPS 80CCD(1B) ₹50K | Not allowed | Allowed |
| Default from FY 2024-25 | Yes | No (must opt in) |
| Max surcharge rate | 25% | 37% (income > ₹5Cr) |
Zero-Tax Salary Calculation — FY 2025-26
| Gross Salary | Std Deduction | Taxable Income | Tax Before Rebate | 87A Rebate | Net Tax |
|---|---|---|---|---|---|
| ₹7,00,000 | ₹75,000 | ₹6,25,000 | ₹18,750 | ₹18,750 | ₹0 |
| ₹10,00,000 | ₹75,000 | ₹9,25,000 | ₹42,500 | ₹42,500 | ₹0 |
| ₹12,75,000 | ₹75,000 | ₹12,00,000 | ₹60,000 | ₹60,000 | ₹0 |
| ₹15,00,000 | ₹75,000 | ₹14,25,000 | ₹93,750 | Nil | ₹97,500 + cess |
| ₹20,00,000 | ₹75,000 | ₹19,25,000 | ₹1,93,750 | Nil | ₹2,01,500 + cess |
87A rebate applies only when net taxable income ≤ ₹12,00,000 (after standard deduction). Income > ₹12L: no rebate applies, full tax calculated.
Frequently Asked Questions
How is income up to ₹12 lakh tax-free in FY 2025-26?
Under the new regime for FY 2025-26, the tax on ₹12 lakh income works out to ₹60,000 (0% on first ₹4L + 5% on next ₹4L + 10% on next ₹4L). Budget 2025 raised the Section 87A rebate to ₹60,000, which exactly covers this liability — making net tax zero. No investment or deduction is required. This benefit is not available to special-rate incomes like STCG on equities.
What is the Section 87A rebate for FY 2025-26?
The Section 87A rebate was raised from ₹25,000 to ₹60,000 in Budget 2025 (Finance Act 2025). It applies under the new regime only, for individuals whose total income does not exceed ₹12 lakh. The rebate wipes out the entire tax liability (calculated at new regime slab rates), resulting in zero tax. Surcharge is not covered — surcharge still applies if income exceeds ₹50 lakh.
What is the standard deduction in the new regime for FY 2025-26?
The standard deduction under the new tax regime was increased to ₹75,000 (from ₹50,000) effective FY 2024-25, and continues at ₹75,000 for FY 2025-26. It applies to salaried employees and pensioners. For a salaried person earning ₹12.75 lakh gross salary, deducting ₹75,000 leaves taxable income of ₹12 lakh, which qualifies for the full 87A rebate of ₹60,000 — resulting in zero tax.
How is tax calculated on a salary of ₹12 lakh in FY 2025-26?
Gross salary: ₹12,00,000. Less standard deduction: ₹75,000. Net taxable income: ₹11,25,000. Wait — if gross is ₹12,75,000: minus ₹75K = ₹12,00,000 taxable. Tax: 0% on ₹4L (₹0) + 5% on ₹4L (₹20,000) + 10% on ₹4L (₹40,000) = ₹60,000. Less 87A rebate: ₹60,000. Net tax = ₹0. For gross salary exactly ₹12L: taxable = ₹11.25L → tax ≈ ₹52,500 → 87A rebate ₹52,500 → zero tax. Any gross salary ≤ ₹12.75L results in zero tax.
How do old and new regime slabs compare in FY 2025-26?
New regime (FY 2025-26 revised): ₹0–4L: 0%, ₹4–8L: 5%, ₹8–12L: 10%, ₹12–16L: 15%, ₹16–20L: 20%, ₹20–24L: 25%, above ₹24L: 30%. 87A rebate ₹60,000 for income ≤ ₹12L. Standard deduction ₹75,000. Old regime (unchanged): ₹0–2.5L: 0%, ₹2.5–5L: 5%, ₹5–10L: 20%, above ₹10L: 30%. 87A ₹12,500 for income ≤ ₹5L. Deductions allowed (80C, 80D, HRA, home loan, etc.). New regime is default; opt for old only if deductions exceed ~₹3.75L.
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