Income Tax Benefits for Senior Citizens in AY 2025-26: How to Save More Tax and Boost Your Savings

By Siddhi Jain | Sep 16, 2025, 19:37 IST

The Indian Income Tax Act offers special provisions for senior citizens (above 60 years) and super senior citizens (above 80 years). For Assessment Year (AY) 2025–26, several tax relaxations and benefits have been introduced, ranging from higher exemption limits to relief from advance tax payments. These provisions aim to reduce the financial burden on elderly taxpayers while helping them maximize their savings.

Here’s a detailed look at the key tax benefits available to seniors and how they can use them to lower their tax outgo.

1. Choice Between Old and New Tax Regime

From AY 2025–26, senior and super senior citizens can choose between the old regime and the new regime:

Old Regime: Offers higher basic exemption limits, additional deductions, and rebates depending on age.
New Regime: Provides simplified, concessional tax rates but with limited deductions.

For example, under the new regime for FY 2024–25 and FY 2025–26, the revised slabs are:

Income up to ₹4,00,000 → Nil
₹4,00,001 to ₹8,00,000 → 5%
₹8,00,001 to ₹12,00,000 → 10%
₹12,00,001 to ₹16,00,000 → 15%
₹16,00,001 to ₹20,00,000 → 20%
₹20,00,001 to ₹24,00,000 → 25%
Above ₹24,00,000 → 30%

In contrast, the old regime continues to provide age-based exemptions, where seniors and super seniors get a higher basic exemption limit.

2. Higher Basic Exemption Limit

Senior Citizens (60–79 years): ₹3 lakh under both regimes.
Super Senior Citizens (80+ years): ₹5 lakh under the old regime, ₹3 lakh under the new regime.

This ensures that elderly taxpayers have a larger portion of income exempt from tax.

3. Relief from TDS Deductions

Senior citizens can submit Form 15H to their bank or deductor, declaring that their taxable income is below the threshold. Once submitted, no TDS (Tax Deducted at Source) will be deducted on their interest income.

From AY 2026–27, under Section 87A, taxpayers in the new regime with taxable income up to ₹12 lakh will also enjoy rebate benefits.

4. Exemption from Advance Tax

Senior and super senior citizens without business or professional income are not required to pay advance tax. Instead, they can settle their tax liability in one go while filing returns.

5. Standard Deduction on Pension Income

Retired seniors receiving pension from their former employers are eligible for a standard deduction:

₹75,000 under the new regime
₹50,000 under the old regime

If the pension amount is less than the deduction limit, the deduction will be capped at the actual pension received.

6. Health Insurance Premiums and Medical Expenses

Available only under the old regime, Section 80D allows:

Deduction of up to ₹50,000 for health insurance premiums paid for self or spouse.
Deduction of up to ₹50,000 for actual medical expenses, if no insurance policy is taken.

7. Extra Benefit on Interest Income

Under Section 80TTB, senior and super senior citizens can claim up to ₹50,000 deduction on interest earned from:

Savings accounts
Bank fixed deposits
Post office or cooperative bank deposits

8. Option to File ITR Manually

Super senior citizens filing ITR using Sahaj (ITR-1) or Sugam (ITR-4), with income above ₹5 lakh or claiming a refund, have the option to file returns manually on paper, instead of online.

9. Exemption from Filing ITR at Age 75+

Individuals aged 75 years or more, having only pension income, are exempt from filing ITR altogether. Their tax liability is settled directly by the bank paying the pension.

Final Takeaway

The Income Tax Act provides multiple benefits to senior and super senior citizens—from higher exemption limits and deductions on medical expenses to relief from advance tax and TDS. Choosing the right tax regime (old vs new) is crucial to maximizing savings. Seniors should carefully compare both regimes, claim eligible deductions, and consult a tax professional to make the most of these benefits in AY 2025–26.