Income Tax Slabs & Deductions FY 2025–26 - Save Income Tax with Life Insurance
Planning your tax smartly can help you in saving your money and will also offer you tons of benefits. If you are planning to invest and save on your tax, planning is the key. There are many tools that you can use to effectively plan your tax savings. However, to make the most out of it, you have to start planning from very beginning.
Income tax slabs and leveraging legal tax-saving strategies are essential to maximize your savings and secure your financial future. Whether you are a salaried employee or self-employed, wisely planning your taxes can help you keep more of your money while building wealth.
What is Income Slab?
The Income Tax Department of India put different Indian citizens into different categories according to their yearly income. The relationship between the tax to be paid and a citizen's annual income is defined by income tax slabs. These slabs are referred to as tax rates or tax brackets, and they keep on rising as a citizen's income rises with time. These income tax slabs also change every year.
Income Tax Slabs for FY 2025–26
The Indian government has structured tax slabs to ensure fair taxation based on income levels:
Annual Income (₹) | Tax Rate |
Up to ₹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% |
You can claim a rebate up to ₹60,000 if your total income is ₹12 lakh or less, reducing your tax liability significantly.
Effective Ways to Save Income Tax
Here are some legal and widely-used methods to reduce taxable income and save tax:
- Invest in Life Insurance:Premiums paid towards life insurance policies are eligible for deductions under Section 80C (up to ₹1.5 lakh), and maturity/death benefits are tax-free under Section 10(10D). Life insurance not only protects your family financially but also boosts your tax savings.
- Health Insurance Premiums (Section 80D):Deduct up to ₹25,000 for yourself and family, with an additional ₹25,000 for senior citizen parents.
- Home Loan Interest (Section 24b):Up to ₹2 lakh deduction on interest paid for self-occupied homes.
- Education Loan Interest (Section 80E):You can deduct the interest paid on education loans for up to 8 years.
- House Rent Allowance (HRA):Claim exemption by submitting rent receipts if you live in a rented house and receive HRA.
- Donations (Section 80G):Get tax benefits on donations to approved charitable organizations.
- National Pension Scheme (Section 80CCD(1B)):Additional deduction of ₹50,000 beyond Section 80C limit.
Why Life Insurance Is Vital in Tax Planning
Life insurance is more than just a tax-saving tool; it provides comprehensive financial security to your family in your absence. It ensures that debts are cleared, lifestyles are maintained, and future goals like children’s education and marriage are financially supported. Choosing the right life insurance plan not only offers protection but also qualifies you for significant tax exemptions.
Choose Between Old and New Tax Regimes
Decide based on your investment profile:
- Old Regime: Benefits taxpayers with multiple exemptions and deductions.
- New Regime: Offers lower tax rates with minimal exemptions.
Use tax calculators to compare and choose the best option for your situation.
FAQs on Income Tax Slabs & Deductions
- How can I save tax using life insurance?
The slabs start from nil tax up to ₹4 lakh and go up to 30% for income exceeding ₹24 lakh, with multiple slabs in between.
- What are the latest income tax slabs for FY 2025–26?
The slabs start from nil tax up to ₹4 lakh and go up to 30% for income exceeding ₹24 lakh, with multiple slabs in between.
- Are health insurance premiums deductible?
Yes, up to ₹25,000 for self and family, and an additional ₹25,000 for senior citizen parents under Section 80D.
- How do HRA exemptions work?
If you pay rent and receive HRA from your employer, you can claim exemption by submitting valid rent receipts.
- What deductions are available for home loans?
Interest paid up to ₹2 lakh per annum on a self-occupied home loan is deductible under Section 24(b).
Disclaimer
Credit Card:
Credit Score:
Personal Loan:
Home Loan:
Fixed Deposit:
Copyright © 2026 BankBazaar.com.