On 1st February 2025, Finance Minister Nirmala Sitharaman presented the 2025-26 Union Budget, bringing in great news for the middle class. The government announced a revised tax structure that has brought significant relief to the common man. It 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.
All these changes have been introduced by the government to help people save more and invest more. Several measures are also taken to simplify tax compliance to make filing easier.
Let’s understand more about income tax slabs for 2025-26 with the following read, wherein we will talk about the New Tax Regime, the Old Tax Regime, and more updates.
What is an Income Tax Slab?
The government has categorised income into different categories and these are called slabs. Each slab has a different tax rate. So, when you pay income tax to the government, you pay according to the income slab you fall in. Generally, people earning more pay a higher percentage of their income as tax.
Revised Income Tax Slabs 2025-26
As per the Union Budget 2025-26, the government has increased the tax-free income limit to ₹12 lakh. This means people earning up to ₹12 lakh per year do not have to pay any income tax. For salaried employees, the tax-free limit is ₹12.75 lakh as the standard deduction has been increased to ₹75,000.
The following table represents the revised tax slabs for the New Tax Regime 2025-26:
Income Slabs | Income Tax Rates FY 2025-26 |
---|---|
0 to ₹ 4 Lakh | NIL |
₹ 4 Lakh to ₹ 8 Lakh | 5% |
₹ 8 Lakh to ₹ 12 Lakh | 10% |
₹ 12 Lakh to ₹ 16 Lakh | 15% |
₹ 16 Lakh to ₹ 20 Lakh | 20% |
₹ 20 Lakh to ₹ 24 Lakh | 25% |
Above ₹ 24 Lakh | 30% |
Now, let’s take a look at the existing tax slabs before we decide which tax regime works for you.
Current Income Tax Slabs 2024-25
New Tax Regime (2024-25):
Income Slabs | Tax Rate |
---|---|
0 to ₹ 3 Lakh | NIL |
₹ 3 Lakh to ₹ 7 Lakh | 5% |
₹ 7 Lakh to ₹ 10 Lakh | 10% |
₹ 10 Lakh to ₹ 12 Lakh | 15% |
₹ 12 Lakh to ₹ 15 Lakh | 20% |
Above ₹ 15 Lakh | 30% |
Old Tax Regime:
Income Slabs | Tax Rate |
---|---|
0 to ₹ 2.5 Lakh | NIL |
₹ 2.5 Lakh to ₹ 5 Lakh | 5% |
₹ 5 Lakh to ₹ 10 Lakh | 20% |
Above ₹ 10 Lakh | 30% |

Which Tax Regime to Choose?
Now that there is zero tax up to ₹12.75 lakh, the New Tax Regime is a better choice for most people. However, keep in mind the old regime may still help you if you have high deductions.
So, go for the New Tax Regime 2025-26 if your income is up to ₹12.75 lakh. You would have lower tax rates for higher income and hence, there is no need for tax-saving investments.
But if you have big tax-saving investments like home loan interest, PPF, EPF, NPS, medical insurance premiums and more, then you can stick to the Old Tax Regime.
Other Major Tax Benefits in Union Budget 2025-26
- Significant changes in TDS & TCS (Tax Deducted/Collected at Source)
Tax Type Old Limit New Limit TDS on Senior Citizen Interest ₹ 50,000 ₹ 1,00,000 TDS on Rental Income ₹ 2,40,000 ₹ 6,00,000 TCS Collection Limit ₹ 7,00,000 ₹ 10,00,000 - Now, you have 4 years instead of 2 years to update tax returns.
- There will be no tax on National Savings Scheme (NSS) withdrawals from August 29, 2024.
- Homebuyers can have two tax-free self-occupied homes. Earlier, only one home was allowed.
- Tax incentives for new startups would continue for 5 more years.
- There will be tax exemption on investments from Sovereign Wealth Funds until 2030.
Also Read: Union Budget 2025: Key Highlights & Impacts
The income tax slabs for 2025-26 have been revised to offer a big relief, especially for salaried people. The tax slab for salaried employees 2025-26 would allow zero tax up to ₹12.75 lakh – all thanks to the income tax rebate 2025-26. However, those with high tax deductions may still benefit from the old tax regime. Regardless, it is recommended to compare both and pick the one that saves you more tax!