Latest Changes in the Income Tax Regime in India (2025–2026) and How You Can Save More on Taxes

India’s income tax system has undergone several important updates in recent years, especially with the government pushing the new tax regime as the default option for taxpayers. These changes aim to simplify taxation, reduce compliance burdens, and increase disposable income for individuals and businesses.

However, many taxpayers still don’t fully understand how these changes affect them or how they can legally reduce their tax liability. In this article, we explain the latest changes in the Indian income tax regime and practical ways you can save more on taxes.

Understanding the Current Income Tax Regime in India

India currently offers two tax systems:

1. Old Tax Regime
2. New Tax Regime (Default option)

The new tax regime provides lower tax rates but fewer deductions, while the old regime allows multiple deductions under sections like 80C, 80D, HRA, and home loan interest.

Recent policy changes are encouraging taxpayers to move toward the new regime because of simplified taxation and reduced paperwork.

Latest Changes in the Income Tax Regime

1. Higher Tax Rebate for Individuals

One of the biggest changes is the increase in the Section 87A rebate.

Under the updated rules:

• Taxpayers with income up to ₹12 lakh can receive a rebate of up to ₹60,000.
• This effectively makes their tax liability zero under the new tax regime.

For salaried individuals, when the standard deduction is included, income up to ₹12.75 lakh can become tax-free.

2. Increase in Standard Deduction

The government has increased the standard deduction for salaried individuals under the new regime.

• Old Standard Deduction: ₹50,000
• New Standard Deduction: ₹75,000

This directly reduces taxable income and lowers the final tax payable.