The Union Budget 2025-26, presented by Nirmala Sitharaman, brought significant tax relief for the middle class. One of the biggest highlights is the new income tax rates, which now offers zero personal tax till 12 LPA (12 lakh per annum) for salaried individuals.
This move aims to boost household savings, increase disposable income, and stimulate economic growth. Let’s explore the updated income tax slabs, key changes, and their impact on taxpayers.
New Income Tax Slabs for FY 2025-26
Under the revised income tax slab FY 2025-26, individuals earning up to ₹12 lakh annually will not have to pay any tax. This includes a standard deduction of ₹75,000 for salaried employees, making effective tax-free income ₹12.75 lakh.
Below is a detailed breakdown of the new income tax rates 2025:
| Income Slab | Tax Rate |
| ₹0 – ₹4 lakh | Nil |
| ₹4 – ₹8 lakh | 5% |
| ₹8 – ₹12 lakh | 10% |
| ₹12 – ₹16 lakh | 15% |
| ₹16 – ₹20 lakh | 20% |
| ₹20 – ₹24 lakh | 25% |
| Above ₹24 lakh | 30% |
Key Budget 2025 Updates on Personal Taxation
The new tax structure is designed to provide significant relief to the middle class, encouraging higher savings and investments. Here are some key highlights:
- No personal tax till 12 LPA: The tax-free slab has been extended, ensuring more take-home pay for salaried professionals.
- Lower tax rates: The new slabs significantly reduce the tax burden for individuals across various income brackets.
- Encouragement for investment: With increased disposable income, taxpayers can now focus more on savings, mutual funds, and other wealth-building avenues.
Related read: How to build wealth with low income
Impact of the New Income Tax Rates 2025
For Salaried Employees
- Higher tax exemption means increased take-home salary.
- Reduced tax rates in higher slabs make taxation more progressive.
- Deductions and exemptions remain key factors in further reducing taxable income.
For Businesses and Entrepreneurs
- More disposable income among the middle class could boost consumer spending.
- Reduced tax burden leads to better economic growth and investment opportunities.
For Investors
- More savings mean higher investments in mutual funds, stocks, and real estate.
- Encourages long-term financial planning and wealth accumulation.
How to Benefit from the New Tax Regime?
If you’re wondering how to maximize your tax benefits under the new income tax slab FY 2025-26, here are some tips:
- Opt for tax-saving investments: Consider investing in PPF, ELSS mutual funds, and tax-saving fixed deposits.
- Utilize deductions: Make use of deductions like Section 80C (₹1.5 lakh), 80D (health insurance), and home loan benefits.
- Plan your income structure: For salaried professionals, structuring salary components wisely can enhance tax savings.
Also Read: Essential Financial Tips for 2025
Final Thoughts
The Budget 2025 updates bring a major shift in India’s taxation structure, offering relief to millions of taxpayers. With no personal tax till 12 LPA, the new system enhances affordability, savings, and investment potential. Whether you’re a salaried employee, a business owner, or an investor, these changes can positively impact your financial planning. Stay informed and leverage the new income tax rates 2025 to achieve better financial security.
