Income Tax Slabs after Budget 2025: Changes in New Tax Regime, New vs Old Tax Regime

Budget 2025 has brought major change in Income Tax slabs for Personal Taxation. The New Regime Slabs applicable for FY2025-26 has been revised.

Budget 2025: Changes in Income Tax Slabs

CA Pratibha Goyal | Feb 1, 2025 |

Income Tax Slabs after Budget 2025: Changes in New Tax Regime, New vs Old Tax Regime

Income Tax Slabs after Budget 2025: Changes in New Tax Regime, New vs Old Tax Regime

Budget 2025 has brought major change in Income Tax slabs for Personal Taxation. The New Slabs applicable for Financial Year 2025-26 (Assessment Year 2026-27) are as follows:

New Slabs under the New Tax Regime

0-4L0%
4-8L5%
8-12L10%
12-16L15%
16-20L20%
20-24L25%
Above 24L30%

There has been no change in slabs under the Old Tax Regime:

Income Tax Slabs under the Old Tax Regime

0-2.5L0%
2.5-5L5%
5-10L20%
Above 10L30%

Here is a comparison between Slabs under the New Tax Regime up to AY 2025-26 and updated slabs by Budget 2025.

Slabs under New Tax Regime
Upto AY 2025-26Budget 2025
0-3L0%0-3L0%
3-4L5%3-4L0%
4-7L5%4-7L5%
7-8L10%7-8L5%
8-10L10%8-10L10%
10-12L15%10-12L10%
12-15L20%12-15L15%
15-16L30%15-16L15%
16-20L30%16-20L20%
20-24L30%20-24L25%
Above 24L30%Above 24L30%

Some Analysis:

Salaried Taxpayers under New Tax Regime:

  • Salary Income of Rs.12,75,000 will be Tax-Free under the New Tax Regime. Salaried Taxpayers in New Tax Regime enjoy a Standard Deduction of Rs.75,000, Which means the Taxable Salary is Rs.12,00,000.
  • Rebate under Section 87A increased from Rs.25000 to Rs.60,000 under New Tax Regime with annual income up to Rs.12,00,000.
  • Therefore Total Tax will be Zero after the rebate.

For other than Salaried Taxpayers, Income of Rs.12,00,000 will be Tax-Free under the New Tax Regime.

Once your income is more than Rs.1200000, no benefit of rebate will be available. However, you will be eligible for the benefit of marginal relief.

IncomeTaxComments
12000000Rebate of Rs.60000
125000050000

Tax=67500

Increase in Income=50000

An increase In Tax is more than Increase in Income, so Marginal Relief is available

130000075000No Rebate Benefit
1500000109200No Rebate Benefit
2500000343200No Rebate Benefit

Here is a comparison between Slabs under the New Tax Regime up to AY 2025-26 and updated slabs by Budget 2025 and Income Tax Slabs as per the Old Tax Regime:

Old Tax Regime (No Change)New Tax Regime (Updated Slabs)New Tax Regime (Upto AY 2025-26)
0-2.5L0%0-2.5L0%0-2.5L0%
2.5-3L5%2.5-3L0%2.5-3L0%
3-4L5%3-4L0%3-4L5%
4-5L5%4-5L5%4-5L5%
5-7L20%5-7L5%5-7L5%
7-8L20%7-8L5%7-8L10%
8-10L20%8-10L10%8-10L10%
10-12L30%10-12L10%10-12L15%
12-15L30%12-15L15%12-15L20%
15-16L30%15-16L15%15-16L30%
16-20L30%16-20L20%16-20L30%
20-24L30%20-24L25%20-24L30%
Above 24L30%Above 24L30%Above 24L30%

Some Analysis:

  • Taxpayers with Income of up to Rs. 12,00,000 will always opt for the New Tax Regime.
  • For a taxpayer with an income of Rs. 2400000, his deductions should be more than Rs. 775000, to opt for Old Tax Regime.

Analysis for Salaried Taxpayers

 

Taxpayers with Income of up to Rs. 12,00,000 will always opt for the New Tax Regime.

For a taxpayer with a Salary income of Rs. 2400000, his deductions should be more than Rs. 800000, to opt for Old Tax Regime.

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