Income tax Salary-wise Details 2025: How to calculate tax if salary is over ₹12.75 lakh Detailed Guide

Income tax Salary-wise Details 2025: Income Tax Calculation for Salaries Above ₹12 Lakh, In a landmark move, Union Finance Minister Nirmala Sitharaman’s presentation of the 2025 Union Budget has brought substantial relief to taxpayers, particularly the middle class. While individuals earning up to ₹12 lakh will not have to pay any income tax, those with salaries slightly above ₹12 lakh will still benefit from reduced tax liabilities due to new tax slabs and reforms introduced. In this article, we explore how to calculate income tax for those earning salaries above ₹12 lakh, and how much they stand to save under the revised tax regime.

Income tax Salary-wise Details 2025 Key Highlights

In her address to Parliament, Nirmala Sitharaman announced that individuals earning up to ₹12 lakh annually would be exempt from paying income tax. This tax relief is part of the government’s broader effort to alleviate the financial burden on the middle class.

For those earning ₹12.75 lakh or more, tax savings will still apply, but the rates differ based on income brackets. Let’s break down the details of the new tax structure, which applies to all individuals earning above ₹12 lakh.

Understanding the New Tax Slabs for FY 2025-26

Under the revised tax structure introduced in the 2025 Union Budget, income is taxed in a progressive manner, with higher rates applicable to higher income levels. Here’s a summary of the newly proposed income tax slabs:

As per the new structure, individuals earning up to ₹12 lakh will not be required to pay any tax due to the tax rebate. However, once income exceeds ₹12 lakh, tax will be applicable based on the specific income slabs.

How to Calculate Tax for Salaries Above ₹12 Lakh

For individuals earning more than ₹12 lakh, the income tax calculation will follow the updated slabs. Let’s walk through a few scenarios to understand how tax is computed:

Case 1: Income of ₹13 Lakh

An individual earning ₹13 lakh annually falls into the ₹12 Lakh to ₹16 Lakh range, so the tax calculation will involve the following:

1. Income between ₹12 lakh and ₹13 lakh: Taxed at 15%.
   • Tax for ₹1 lakh = ₹1,00,000 × 15% = ₹15,000.

The total income tax for someone earning ₹13 lakh is ₹15,000. With the rebates and tax cuts introduced, the savings on tax for those earning ₹13 lakh would amount to ₹25,000 compared to the previous system.

Case 2: Income of ₹14 Lakh

For an individual earning ₹14 lakh:

1. Income between ₹12 lakh and ₹14 lakh: Taxed at 15%.
   • Tax for ₹2 lakh = ₹2,00,000 × 15% = ₹30,000.

The total tax for someone earning ₹14 lakh is ₹30,000, with savings of ₹30,000 compared to the previous regime.

Case 3: Income of ₹15 Lakh

For a salary of ₹15 lakh:

1. Income between ₹12 lakh and ₹15 lakh: Taxed at 15%.
   • Tax for ₹3 lakh = ₹3,00,000 × 15% = ₹45,000.

Total tax for a ₹15 lakh income is ₹45,000, resulting in a savings of ₹35,000 compared to the old tax regime.

Case 4: Income of ₹16 Lakh

For someone earning ₹16 lakh:

1. Income between ₹12 lakh and ₹16 lakh: Taxed at 15%.
   • Tax for ₹4 lakh = ₹4,00,000 × 15% = ₹60,000.

Thus, the total tax liability for someone earning ₹16 lakh is ₹60,000, and the savings would amount to ₹50,000 compared to the previous tax slabs.

Significant Savings for Higher Incomes

Individuals with higher salaries also benefit significantly from the tax relief. Here’s a breakdown of the savings for incomes ranging from ₹17 lakh to ₹23 lakh:

• ₹17 Lakh: Tax savings of ₹60,000.
• ₹18 Lakh: Tax savings of ₹70,000.
• ₹19 Lakh: Tax savings of ₹80,000.
• ₹20 Lakh: Tax savings of ₹90,000.
• ₹21 Lakh: Tax savings of ₹95,000.
• ₹22 Lakh: Tax savings of ₹1,00,000.
• ₹23 Lakh: Tax savings of ₹1,05,000.

Thus, individuals earning more than ₹12 lakh but less than ₹24 lakh stand to benefit from tax reductions in the range of ₹25,000 to ₹1,05,000, depending on their income level.

How Tax is Calculated for Higher Incomes: ₹24 Lakh and Beyond

For those with an income of ₹24 lakh or more, the tax liability increases due to the higher income tax slabs. The revised rates are as follows:

• ₹12 to ₹16 Lakh: Taxed at 15%.
• ₹16 to ₹20 Lakh: Taxed at 20%.
• ₹20 to ₹24 Lakh: Taxed at 25%.
• Above ₹24 Lakh: Taxed at 30%.

Given that individuals in this income bracket are subject to higher rates, the government expects significant tax savings in the range of ₹1.10 lakh for individuals earning ₹24 lakh or more compared to the previous tax regime.

Overview of Income Tax Savings for Different Salaries

Here’s a quick reference table summarizing tax savings for various income levels as per the new tax regime:

New Tax Slabs and Savings 2025 Details

Conclusion: What Does This Mean for Taxpayers?

The 2025 Union Budget offers a significant reduction in tax liability for middle-class taxpayers. Those earning up to ₹12 lakh are exempt from income tax, while those earning above ₹12 lakh benefit from reduced tax rates and substantial savings.

The progressive nature of the new tax structure ensures that individuals across various income levels stand to benefit from the tax cuts, with the biggest relief for those in the ₹12 lakh to ₹24 lakh range. These changes are expected to foster greater economic stability and increase disposable income, leading to potential boosts in consumption and savings.

Do you think these changes will impact your tax planning for FY 2025-26? Would you prefer the new tax regime, or does the old one with exemptions still seem better suited to your needs? Let me know your thoughts!