Latest Income Tax Slabs FY 2025-26 after Budget 2025: The income tax slabs and income tax rates under the new tax regime have been revised for FY 2025-26. The revised income tax slabs were announced by FM Nirmala Sitharaman in her Union Budget 2025 speech. The most important takeaway from the new income tax rules for the upcoming financial year is that individuals earning up to Rs 12 lakh will have to pay ZERO tax. For salaried individuals, once the standard deduction of Rs 75,000 under the new tax regime is counted, this income level goes up to Rs 12.75 lakh.
Additionally, across the board income tax slab changes mean that individuals under the new tax regime, will now have to pay lower taxes, even at income levels above Rs 12 lakh. There is also the concept of marginal relief, which allows individuals earning just above Rs 12 lakh to not pay taxes more than their additional income.
The total tax benefit of slab rate changes and rebate at different income levels can be illustrated with examples:
- A tax payer in the new regime with an income of Rs 12 lakh will get a benefit of Rs 80,000 in tax (which is 100% of tax payable as per existing rates).
- A person having income of Rs 18 lakh will get a benefit of Rs 70,000 in tax (30% of tax payable as per existing rates).
- A person with an income of Rs 25 lakh gets a benefit of Rs 1,10,000 (25% of his tax payable as per existing rates).
Latest Income Tax Slabs FY 2025-25 Under New Tax Regime: FAQs Answered
Confused about the new income tax slabs and rates under the new tax regime? Wondering how much tax you will save and what the new income tax slabs are? We list 21 FAQs and their answers as shared by the Income Tax Department. Take a look:
1. What is ‘New Regime’?
New regime provides for concessional tax rates and liberal slabs. However, no deductions are allowed in the new regime (other than those specified for e.g. 80JJAA, 80M, standard deduction).
Also Read | Income Tax slabs 2025-26: How you can pay ZERO tax with Rs 13.7 lakh salary under new income tax regime
2. What are the tax slabs in earlier new regime?
The Finance (No.2) Act, 2024 had the following slabs in the new tax regime for person, being an individual or Hindu undivided family or association of persons [other than a cooperative society], or body of individuals, whether incorporated or not, or an artificial juridical person referred to in sub-clause (vii) of clause (31) of section 2: –
3. What are the new slabs in the proposed new regime introduced by Finance Bill, 2025?
The new slabs proposed are as under:
4. What is the tax benefit for different category of taxpayers (0-24 lakhs)
For income above 12 lakh, in the case of resident individuals, marginal relief shall be allowable .
5. What is the maximum total income for which tax liability for individual taxpayers is NIL?
In the proposed new tax regime, the maximum total income for which tax liability for individual taxpayers is NIL is Rs. 12 lakhs.
6. To claim benefit of NIL tax liability mentioned above, what are the steps required to be taken?
The benefit of such Nil tax liability mentioned above is available only in the new tax regime. This New tax regime is the default regime. To avail the benefit of rebate allowable under proposed provisions of new tax regime, only return is to be filed otherwise no other step is required to be taken.
7. The change in tax slabs is beneficial for which category of persons?
New tax regime is applicable to person, being an individual or Hindu undivided family or association of persons [other than a co-operative society], or body of individuals, whether incorporated or not, or an artificial juridical person referred to in sub-clause (vii) of clause (31) of section 2. Accordingly, change in tax slabs will benefit all these persons.
Also Read | New vs old income tax regime after Budget 2025: Post income tax slab changes, which tax regime is better for salaried middle class taxpayers?
8. How will a person who has an income Rs 12 lakh benefit from new rates?
Any individual earlier was required to pay a tax of Rs 80,000 (in the new regime) for an income of Rs. 12 lakhs. Now he will be required to pay nil tax on such income.
9. Whether the limit of total income for NIL tax payments has increased in this budget?
Yes, the limit of total income for NIL tax payments in the new tax regime has been increased to Rs. 12 lakhs in this budget provided the taxpayer files ITR to avail the rebate.
10. What was the earlier limit of income for nil tax payment?
Earlier the limit of income for nil tax payment was Rs 7 lakh. By increasing this limit to Rs 12 lakh around one crore assessees who were earlier required to pay tax varying from Rs 20,000 to Rs 80,000 will be now paying nil tax.
11. Is the standard deduction on salary available in the new regime?
Yes, a standard deduction of Rs. 75,000 is available to a tax payer in the new regime. Therefore, a salaried tax payer will not be required to pay any tax where his income before standard deduction is less than or equal to Rs 12,75,000.
12. Whether standard deduction is available in old regime?
Standard deduction of Rs 50,000 is available in old regime.
13. How many tax payers will benefit from the new rates and slabs?
Presently, for AY 2024-25, about 8.75 crore persons have filed their ITRs. All such assessees who were paying tax in the new tax regime will benefit from the change in rates and slabs
14. What is the extra amount available to the taxpayers as a result of this change?
Approximately Rs 1 lakh crore will be made available in the hands of the taxpayers by virtue of changes in slab, rates and rebate.
15. How is the marginal relief available to individuals?
In the new regime under section 115BAC(1A), marginal relief is available to only resident individuals who have income marginally above Rs 12 lakhs. For example, for a person having income of Rs 12,10,000/-, in the absence of marginal relief, the tax, works out to be Rs. 61,500/- (5% of Rs 4 lakhs + 10% of Rs 4 lakh and 15% of Rs 10 thousand). However, due to marginal relief, the amount of tax to be actually paid is Rs 10,000/-.
16. How much tax will be paid by a tax payer having income of Rs 12,10,000? What is marginal relief?
The tax liability on such tax payer by way of slabs only is Rs 61,500. How ever a person having Rs 12 lakh income pays nil tax. By providing marginal relief it has been ensured that the tax payable by a person having income marginally above Rs 12 lakhs is required to pay only marginal amount of tax equal to the amount of income above Rs 12 lakhs so that his carry home is also Rs 12 lakhs. In this case he will be required to pay a tax of Rs 10,000.
17. How the marginal relief is computed?
The marginal relief is computed in the following manner:-
(i) First the tax as per slab rate is computed on the total income. For e.g. In the answer given to question no.15 above, tax on the total income of Rs 12,10,000/-shall be computed in following steps:
(ii) Tax payable on total income of Rs 12,00,000/- on which rebate is available is Nil.
(iii) Now the tax liability without marginal relief (in this case Rs 61,500) shall be compared with amount exceeding total income upto which rebate is available [in this case Rs 10,000, [i.e. Rs 12,10,000 – Rs 12,00,000]
(iv) The marginal relief shall be computed by deducting the income exceeding Rs 12, 10,000 (i.e. Rs 10,000) from total tax liability determined in this case (i.e. Rs 61,500) as tabulated above.
(v) Therefore, in the above case rebate by way of marginal relief is Rs 51,500 (61,500/- 10,000/- = 51,500/-) is allowed.
(vi) Tax payable is therefore Rs 10,000 [Rs 61,500 – Rs 51,500]
Also Read | Budget 2025 Income Tax calculator explained: Save up to Rs 1.1 lakh! How income tax slab changes will benefit taxpayers at different salary levels under new regime
18. What is the maximum amount of rebate available to any tax payer?
The maximum rebate available is Rs 60,000 which is there for a tax payer having income of Rs 12 lakhs on which tax is payable as per the new slabs.
19. What is the total income till which marginal relief is admissible?
The total income till which marginal relief is available is near about Rs 12,75,000/-.
20. Whether special income having special rate such as capital gains, lottery etc. also be eligible for rebate?
No rebate is not available on income from capital gains or lotteries or any other income on which special rate has been provided in the Act. It is available only on the tax payable as per slabs under section 115BAC.
21. What is the difference between rebate and marginal relief?
Rebate is the deduction from tax which is available to tax payers having income upto Rs 12 lakhs in the new regime. Marginal relief ensures that taxpayers having income marginally higher than Rs 12 lakhs do not pay tax more than the income in excess of 12 lakhs.
