The finance minister Nirmala Sitharaman has made changes in the income tax slabs under the new tax regime in Union Budget 2025. The new income tax slabs under the new tax regime will come into effect from April 1, 2025 for the upcoming financial year 2025-26. The government has raised the tax-free income limit to ₹12 lakh, which means now you would not have to pay any tax if your annual income is within this range. If you are a salaried professional, then you can avail extra benefits of ₹75,000 as a standard deduction.
Proposed Income Tax Rates under the New Regime for FY 2025-26 (AY 2026-27):
| Income Tax Slabs | Tax Rate |
| Upto Rs. 4,00,000 | NIL |
| Rs. 4,00,001 – Rs. 8,00,000 | 5% |
| Rs. 8,00,001 – Rs. 12,00,000 | 10% |
| Rs. 12,00,001 – Rs. 16,00,000 | 15% |
| Rs. 16,00,001 – Rs. 20,00,000 | 20% |
| Rs. 20,00,001 – Rs. 24,00,000 | 25% |
| Above Rs. 24,00,000 | 30% |
- The new tax regime will continue to serve as the default system; however, the Income Tax Bill 2025 retains the old tax regime, providing taxpayers with the option to choose between the two.
- Under the new tax regime, no income tax will be payable on income up to ₹12 lakh (excluding special rate income such as capital gains).
- For salaried taxpayers, there is a extra benefits of ₹75,000 as a standard deduction introduced in the Union Budget 2025. So, for salaried employees, the tax-free limit is ₹12.75 lakh as the standard deduction has been increased to ₹75,000.
- The senior citizen tax deduction cap was enhanced from ₹50,000 to ₹1 lakh.
Current Income Tax Slabs for FY 2024-25 (AY 2025-26):
New Tax Regime:
| Income Tax Slabs | Tax Rate |
| Upto Rs. 3,00,000 | NIL |
| Rs. 3,00,001 – Rs. 7,00,000 | 5% |
| Rs. 7,00,001 – Rs. 10,00,000 | 10% |
| Rs. 10,00,001 – Rs. 12,00,000 | 15% |
| Rs. 12,00,001 – Rs. 15,00,000 | 20% |
| Above Rs. 15,00,000 | 30% |
- Tax rebate up to ₹25,000 is applicable if the total income does not exceed ₹7,00,000 (not applicable for NRIs). Therefore, no tax for an income up-to ₹7,00,000.
- The standard deduction for salaried employees is ₹75,000 under the new regime.
- The deduction on family pension received has been increased from ₹15,000 to ₹25,000.
Old Tax Regime:
| Income Tax Slabs | Tax Rate |
| Upto Rs. 2,50,000 | NIL |
| Rs. 2,50,001 – Rs. 5,00,000 | 5% |
| Rs. 5,00,001 – Rs. 10,00,000 | 20% |
| Above Rs. 10,00,000 | 30% |
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Note: This Post was last updated on March 24, 2025
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