How to Save Tax on Salary: Effective Strategies for 2025

For salaried Indians, higher pay implies better opportunities to save and invest. However, you need to be aware of the tax payment system to save tax on your salary. Income tax in India varies according to your income bracket, but for each bracket, there are numerous income tax deductions available that you can take advantage of! It will assist you in understanding how tax saving works for the salaried class and avoiding potential issues during tax preparation.

You can also use an Income Tax Calculator AY 2025-26 to calculate the tax you’ll have to pay on your entire income and how much you can save using various tax-saving methods. Let's now take a deeper look at the many tax-saving solutions accessible to salaried individuals.

Effective Strategies to Save Tax on Salary in 2025

Take a look at these strategies that will help you reduce your tax amount in 2025:

● Employees’ Provident Fund (EPF)

Employees' Provident Fund, generally known as EPF, is one of the most popular tax-saving solutions for salaried individuals. Under this arrangement, both employees and employers contribute 12% of their salary to the Employee Provident Fund, and employees earn a fixed rate of interest on their contributions. Salaried employees who contribute to EPF benefit from tax exemptions as the accumulated funds in an employee's PF account, as well as any interest received, are tax-free!

● Section 80C Deductions

Section 80C is one of the most popular methods for obtaining income tax deductions, and it allows people to claim deductions for different expenditures and investments made throughout the fiscal year. Remember, under Section 80C, the maximum tax cut limit is Rs. 1.5 lakh! It covers the investments and expenses of your Life Insurance Premiums, principal repayment on home loans, tuition expenses for children's schooling and more.

● Section 80CCC Investments

Section 80CCC specifically targets deductions for investments in pension funds or annuity plans offered by insurance firms and helps you decrease your tax on salary amount! This way, section 80CCC encourages individuals to plan for retirement by investing in pension plans, with the amount invested deducted from taxable income up to the maximum limit of Rs. 1.5 lakh.

● Section 80CCD(1) Contributions

Section 80CCD(1) is for deductions for payments to one's National Pension System (NPS) account, a government-sponsored pension program. This provision encourages long-term retirement savings by allowing contributions of up to 10% of pay (for salaried persons) or 20% of gross total income (for self-employed individuals) to be deducted! Remember, it is subjected to the overall provision 80C ceiling of Rs 1.5 lakh, which means, despite the individual provisions, the total amount that can be claimed as a deduction under Sections 80C, 80CCC, and 80CCD(1) is jointly restricted at Rs. 1.5 lakh.

● Section 80CCD(1B)

Section 80CCD(1B) gives an additional tax deduction advantage of up to Rs. 50,000 for people who invest in the National Pension System (NPS), and this unique deduction goes beyond the regular Rs. 1.5 lakh limit under Section 80CCD(1). This system allows people to decrease their taxable income by depositing more in their savings for retirement through the National Pension System (NPS).

● Tax Deduction from Donations

You can save taxes by contributing money for social or charitable reasons, as well as making contributions to the National Relief Fund! A person can claim 50% of the amount contributed to non-governmental organizations (NGOs) and 10% of their adjusted total income as tax-exempt. However, the NGOs must give an 80G certificate so that the taxpayer may claim a tax deduction under Section 80G of the Income Tax Act. Another factor is that individuals can also claim a tax deduction if they donate to any political party and fulfill the standards outlined in Section 80GGC.

● Public Provident Fund (PPF)

The Public Provident Fund, or PPF, is a tax-saving alternative for salaried workers that gives a return on tax-free investments. PPF is one of the finest investment-cum-tax saving choices for salaried individuals, allowing them to save for retirement while also earning assured returns at the same time! PPF investments fall within the EEE category, which implies that the amount invested in a PPF account is tax-deductible under Section 80C. This aids in income tax planning and helps you save tax on your salary as a salaried employee! In addition, the accumulated sum, together with the returns, are tax-free when withdrawn from the account, a great technique to maximize the tax benefits for salaried personnel.

● Equity Linked Savings Scheme (ELSS)

If you're searching for financial solutions that allow salaried staff to deduct income taxes, you can invest in ELSS (Equity Linked Savings Scheme). The ELSS is considered one of the finest tax-saving solutions because investments in ELSS plans can be deducted from an employee's taxable income under Section 80C! ELSS distinguishes itself from other tax-saving choices for salaried persons because of its dual benefit of greater returns that are only partially taxable.

Final Remarks

In the fiscal year 2025-26, salaried personnel can benefit from the above-mentioned rules and regulations of the Income Tax Act and save tax on salary! However, the income tax slab for senior citizens and working professionals can vary, and so can the ways to save tax. Be mindful of all the factors that can help you save a considerable amount of tax every year!

When you understand the system, you can maximize your savings. If you need professional help, institutions like PNB MetLife can help you with expert advice and investment choices.