Income Tax Rates, 2025-26 Update: New tax brackets under the revised system revealed! Finance Minister Nirmala Sitharaman states that earnings up to ₹12 lakh will be entirely tax-exempt if a person does not have income from specialized interest assets. She also declared tax relief for elderly citizens and simplification of TDS. Remain with us for swift updates and insights.
As anticipated, the Finance Minister revealed that there would be no alterations to the old regime. The newly introduced slab and rates for taxpayers in the updated regime are expected to render the old regime unnecessary for numerous taxpayers. According to the Income-tax Department’s data, more than 70% of taxpayers have transitioned to the new regime.
The finance minister stated that for taxpayers earning up to ₹12 lakh, excluding special rate interests like capital gains, a tax rebate is available, alongside a restructure of slab rates, ensuring that individuals will not have to pay any tax on income up to ₹12 lakh.
The FM states that the new tax slab and rates in the new regime will render income up to ₹12 lakh tax-free, provided the individual has no special interest income.
Income Tax Slab FY 2025-26 – New Regime
| Income range (₹) | 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% |
Income Tax Slab FY 2025-26 – Calculation and Benefit Analysis
A taxpayer under the new system earning Rs 12 lakh will receive a tax advantage of Rs 80,000 (equal to 100% of the tax owed under the current rates). An individual earning Rs 18 lakh will receive a tax benefit of Rs 70,000 (30% of the tax owed based on current rates). An individual earning Rs 25 lakh receives a benefit of Rs 1,10,000 (25% of the tax owed according to current rates).
Taxpayers have received significant relief in Nirmala Sitharaman’s budget. Currently, if working individuals choose the new tax system, they will be exempt from paying tax on their yearly income up to ₹12.75 lakh. This is the way you will receive this advantage.
The government will eliminate tax in the second and third brackets under 87A. In addition to this, a standard deduction of ₹75 thousand will be accessible. Thus, the overall earnings of working individuals will remain tax-exempt up to ₹12.75 lakh.
Remember that this assistance is exclusively for employees with salaries. In the event of income from any alternative source, the tax exemption threshold will be merely ₹12 lakh. In addition to this, all taxpayers can now submit IT returns for the past 4 years simultaneously. Previously, this limit was set at 2 years, whereas for senior citizens, the TDS threshold has been raised from ₹50 thousand to ₹1 lakh.
Announcements for Middle Class
- Now there is no tax on income of Rs 12 lakh.
- For salaried people, the tax limit is Rs 12.75 lakh and the standard deduction is Rs 75,000.
- Zero tax on income from Rs 0 to 4 lakh.
- 10% tax from Rs 8 to 12 lakh, profit of 80 thousand.
- 15% tax from Rs 12 to 16 lakh, profit of 70 thousand.
- 20% tax from Rs 16 to 20 lakh.
- 30% tax on income above Rs 24 lakh.
- Profit from Rs 1.10 lakh to Rs 25 lakh.
- Big benefit for taxpayers in the new system.
- Tax exemption doubled for senior citizens.
- TDS limit increased to Rs 10 lakh.
- You can file updated ITR for 4 years.
- TDS exemption on rental income increased to Rs. 6 lakh.
