The Union Budget 2025-26 has introduced significant income tax reforms, focusing on easing the burden for the middle class and improving compliance. The Finance Minister announced a new income tax regime with revised income tax slabs that ensure zero tax liability for individuals earning up to ₹12 lakh per year. Salaried employees benefit even further with tax-free income up to ₹12.75 lakh, thanks to a ₹75,000 standard deduction.
This blog provides a detailed breakdown of the latest income tax slabs, tax rates, and savings opportunities, making it easier for taxpayers to plan their finances effectively.
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New Income Tax Slabs 2025-26
The revised income tax slab rates under the new tax regime for FY 2025-26 (AY 2026-27) are as follows:
| Income Range (₹) | New Tax Rate (%) |
|---|---|
| 0 – 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% |
Key Benefits
- Zero tax for income up to ₹12 lakh (due to rebates and deductions under the new regime).
- Salaried employees enjoy tax-free income up to ₹12.75 lakh (including ₹75,000 standard deduction).
- Lower tax rates for income between ₹8-25 lakh, reducing the tax burden on individuals and professionals.
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Who Benefits the Most?
The Budget 2025-26 tax reforms primarily benefit:
- Salaried Employees & Middle-Class Taxpayers – Increased tax exemption limit and lower tax rates boost disposable income.
- Senior Citizens – Higher TDS limit on interest income (₹1 lakh) reduces tax burden.
- Self-Employed & Business Owners – Compliance simplifications, tax rationalization, and reduced TDS/TCS obligations.
- Startups & Entrepreneurs – Tax benefits extended to 2030, encouraging innovation and investment.
How Much Tax Can You Save?
Examples of Tax Savings Under New Regime
| Annual Income (₹) | Tax Savings Compared to Previous Slabs (₹) |
|---|---|
| 12,00,000 | 80,000 (100% tax reduction) |
| 18,00,000 | 70,000 (30% tax reduction) |
| 25,00,000 | 1,10,000 (25% tax reduction) |
These reductions result in higher disposable income, encouraging savings and investments.
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Additional Tax Reforms in Budget 2025-26
Apart from the new income tax slabs, the government has also introduced:
- TDS/TCS Rationalization:
- Senior Citizens: TDS limit on interest income increased from ₹50,000 to ₹1 lakh.
- Rent Payments: TDS exemption limit raised from ₹2.4 lakh to ₹6 lakh.
- No TCS on Education Loans under the Liberalized Remittance Scheme (LRS).
- Easier Compliance & Paperless Tax Filings – Simplified tax filing process and extended time for voluntary compliance.
- Investment Incentives for Startups & Businesses:
- Startup Tax Benefits Extended to 2030.
- Tax incentives for IFSC, sovereign wealth funds, and pension funds investing in India.
How to File Taxes for FY 2025-26?
- Choose Your Tax Regime – Compare the old vs. new tax regime benefits.
- Claim Eligible Deductions – Maximize tax savings through exemptions.
- File Returns Online – Use the Income Tax Department’s e-filing portal.
- Seek Professional Advice – If needed, consult a tax expert for strategic tax planning.
Conclusion: A Taxpayer-Friendly Budget
The Union Budget 2025-26 delivers major tax relief, particularly for middle-class salaried employees. The new income tax slabs ensure zero tax for incomes up to ₹12 lakh, benefiting millions of taxpayers. The TDS/TCS relaxations and extended benefits for startups and businesses make this budget an investment-friendly reform.
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FAQs: New Income Tax Slabs 2025-26
1. Who qualifies for zero tax under the new tax regime?
Individuals earning up to ₹12 lakh qualify for zero tax liability due to rebates. Salaried employees get an additional standard deduction of ₹75,000, making the tax-free limit ₹12.75 lakh.
2. Should I choose the new or old tax regime?
The new regime is beneficial for those with lesser deductions. However, taxpayers claiming high HRA, Section 80C, 80D, or home loan benefits might consider the old regime.
3. How much tax will I pay on ₹15 lakh annual income?
For ₹15 lakh income:
- Old Regime: Approx. ₹2,10,000 tax.
- New Regime: Approx. ₹1,50,000 tax (with ₹60,000 savings).
4. What is the new TDS exemption limit for senior citizens?
The TDS exemption limit for senior citizens has been raised to ₹1 lakh for interest income.
5. What is the deadline to file income tax returns for FY 2025-26?
The due date for ITR filing remains 31st July 2025 (for individuals not requiring audit).
With income tax reforms favoring individuals and businesses, now is the perfect time to restructure your financial planning. Optimize tax benefits, file returns timely, and take full advantage of the new tax slabs in Budget 2025-26.
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