income tax
Published on 23 July 2025
Mandatory Auditor's Opinion Requirement for UDIN Generation in GST & Tax Audit
What’s New with Income Tax Slabs in FY 2025–26? A Simple Walkthrough for Taxpayers
Starting April 1, 2025, salaried taxpayers will see some notable changes in how their income is taxed. The Union Budget 2025 has tweaked the new tax regime in a way that makes it more friendly, especially for the middle class. .
New Tax Slabs from FY 2025–26 (AY 2026–27)
Under the revised system, the government has widened the slabs and brought in more relief for moderate earners. Here's how your income will be taxed if you opt for the new regime:
| Income Range | Tax Rate |
|---|---|
| Up to ₹4 lakh | 0% |
| ₹4 lakh – ₹8 lakh | 5% |
| ₹8 lakh – ₹12 lakh | 10% |
| ₹12 lakh – ₹16 lakh | 15% |
| ₹16 lakh – ₹20 lakh | 20% |
| ₹20 lakh – ₹24 lakh | 25% |
| More than ₹24 lakh | 30% |
This means if you earn ₹12 lakh a year, you won’t jump straight into a high tax bracket — the system now lets your income climb gently through the slabs.
Why This Update Matters for You
Let’s break it down into real benefits:
Rebate Bumps Up to ₹60,000
If your total income after deductions is ₹12 lakh or less, you’re eligible for a ₹60,000 rebate under Section 87A — that’s a full waiver of your tax liability. Previously, this relief was capped at ₹25,000 for income up to ₹7 lakh. This one update alone makes a huge difference for many salaried folks.
Higher Standard Deduction for Salaried and Pensioners
The standard deduction — a flat benefit you get for being salaried or retired — has been raised to ₹75,000 under the new regime. Earlier it was ₹50,000. This helps lower your taxable income before the slab rates even kick in.
Marginal Relief to Avoid Tax Shock
Say you earn ₹12.01 lakh. Without marginal relief, you might suddenly owe a few thousand rupees more in tax than someone earning just ₹1,000 less. This new rule fixes that. You won’t end up paying more tax than the extra income you made — a fair and welcome move.
How Does It Compare with the Last Financial Year?
Here’s how things stood in FY 2024–25 under the new regime:
| Income Range (Old) | Tax Rate |
|---|---|
| Up to ₹3 lakh | 0% |
| ₹3 lakh – ₹7 lakh | 5% |
| ₹7 lakh – ₹10 lakh | 10% |
| ₹10 lakh – ₹12 lakh | 15% |
| ₹12 lakh – ₹15 lakh | 20% |
| Above ₹15 lakh | 30% |
The Budget 2025 changes have not only shifted the slabs upward, but they’ve also expanded the no-tax zone and added new cushions like higher rebate and standard deduction. It’s clearly geared toward middle-income earners.
Should You Choose the New Regime?
The new regime still doesn't allow popular deductions like 80C, HRA, or home loan interest. But with these latest updates, it might actually work out better — especially if you don't claim too many exemptions.
Before you decide, it’s worth doing a quick calculation (or having a CA help you). For many, especially salaried individuals in the ₹8–12 lakh bracket, the new regime might now lead to lower taxes than the old one.
Bottom Line
The 2025 update isn’t just about numbers — it’s about making taxes a little less painful. More take-home pay, less paperwork, and a smoother slab structure. If you’ve avoided the new regime in the past, this could be the year to revisit it.