Understanding the New Income Tax Slabs for FY 2025-26: Benefits & Changes Explained
The new income tax regime for FY 2025-26 offers significant benefits, including zero tax for income up to Rs 12 lakh and reduced tax rates for higher income brackets. Learn how these changes will impact your tax savings, especially for middle-class earners, and what steps to take to benefit from the revised slabs.
In Budget 2025, Finance Minister Nirmala Sitharaman introduced some important changes to the income tax system. The key takeaway? No tax for individuals earning up to Rs 12 lakh. This is a big relief, especially for those with salaries that are closer to this amount. With the new tax regime, even salaried individuals can benefit from a standard deduction of Rs 75,000, which helps them earn up to Rs 12.75 lakh without paying any tax.
But what about those who earn more than Rs 12 lakh? The new slabs have been updated so that everyone, including higher earners, will pay lower taxes compared to the previous system. The government has also introduced the concept of marginal relief for people earning just above Rs 12 lakh. This ensures they won’t end up paying significantly more tax just because their income slightly exceeds the Rs 12 lakh mark.
How the tax slabs work:
- 0 to 4 lakh: Nil tax
- 4 to 8 lakh: 5% tax
- 8 to 12 lakh: 10% tax
- 12 to 16 lakh: 15% tax
- 16 to 20 lakh: 20% tax
- 20 to 24 lakh: 25% tax
- Above 24 lakh: 30% tax
In the new income tax system for the year 2025-26, people who earn up to Rs 12 lakh won't have to pay any tax at all. This means that if you have a salary around this amount, you will save a lot of money because you won't be paying taxes on it.
The government has also made changes to the tax rates for higher earnings. So, for people who earn more than Rs 12 lakh, the amount of tax they pay has been reduced. This means that even people with higher salaries will save some money and pay less tax than before.
