New Tax Regime calculation 2025, In Budget 2025, Finance Minister Nirmala Sitharaman announced a set of revisions to the New Tax Regime that will provide substantial tax relief to taxpayers. The revised tax slabs and increased rebate will benefit individuals earning up to ₹12 lakh annually, making their income tax-free. The new tax slabs and rates apply from the Financial Year 2025-26 (Assessment Year 2026-27). This article explores how the new tax regime will impact individuals with income levels ranging from ₹16 lakh to ₹50 lakh, and the potential tax savings compared to the previous regime.
New Tax Regime calculation 2025
In her budget speech, the finance minister outlined the following revised tax slabs for the New Tax Regime, which aim to benefit the middle-class taxpayers. The key highlight is the increase in the tax rebate and the revised slabs that make income up to ₹12 lakh effectively tax-free.
New Tax Slabs and Rates for FY 2025-26 Under the New Tax Regime
Income Range (₹) | Tax Rate |
₹0 – ₹4 lakh | NIL |
₹4 lakh – ₹8 lakh | 5% |
₹8 lakh – ₹12 lakh | 10% |
₹12 lakh – ₹16 lakh | 15% |
₹16 lakh – ₹20 lakh | 20% |
₹20 lakh – ₹24 lakh | 25% |
Above ₹24 lakh | 30% |
How the New Tax Regime Benefits Taxpayers with Income of ₹12 Lakh and Below
Under the new tax system, taxpayers with income up to ₹12 lakh will benefit the most, as the tax rebate and the slab adjustments ensure that they pay no taxes. For salaried individuals, this threshold will extend to ₹12.75 lakh due to the standard deduction of ₹75,000.
- Income up to ₹12 lakh: Tax-free after rebate and revised slab.
- Salary up to ₹12.75 lakh: No tax due to the standard deduction.
This move provides substantial relief to the middle class and encourages greater disposable income, boosting household consumption, savings, and investment.
Tax Impact on Income Levels Above ₹12 Lakh
Although income up to ₹12 lakh is tax-free, those earning more will benefit from the revised tax slabs and reduced tax rates. Let’s explore how this impacts taxpayers in the ₹16 lakh, ₹20 lakh, ₹24 lakh, and ₹50 lakh income ranges.
Tax Savings on ₹16 Lakh Income Due to Revised Slabs
For taxpayers earning ₹16 lakh, the new regime provides significant relief, saving up to ₹50,000 compared to the old tax structure.
Particulars | Current Tax (Old Regime) | Proposed Tax (New Regime) | Tax Saving |
Salary Income | ₹16,00,000 | ₹16,00,000 | ₹50,000 |
Tax Liability | ₹1,70,000 | ₹1,20,000 | ₹50,000 |
Conclusion: Under the old tax regime, the tax payable for a ₹16 lakh income was ₹1.7 lakh, but with the new tax regime, it is reduced to ₹1.2 lakh, providing a tax saving of ₹50,000.
Tax Savings on ₹20 Lakh Income Due to Revised Slabs
For taxpayers earning ₹20 lakh, the new tax structure offers a tax saving of ₹90,000, significantly reducing the tax burden compared to the previous regime.
Particulars | Current Tax (Old Regime) | Proposed Tax (New Regime) | Tax Saving |
Salary Income | ₹20,00,000 | ₹20,00,000 | ₹90,000 |
Tax Liability | ₹2,90,000 | ₹2,00,000 | ₹90,000 |
Conclusion: Under the new tax regime, a ₹20 lakh salaried individual will see a reduction of ₹90,000 in tax liability, from ₹2.9 lakh to ₹2 lakh.
Tax Savings on ₹24 Lakh Income Due to Revised Slabs
Taxpayers earning ₹24 lakh will benefit from the new tax regime, saving ₹1.1 lakh in taxes. This is a substantial reduction, as the net tax payable falls from ₹4.1 lakh to ₹3 lakh.
Particulars | Current Tax (Old Regime) | Proposed Tax (New Regime) | Tax Saving |
Salary Income | ₹24,00,000 | ₹24,00,000 | ₹1,10,000 |
Tax Liability | ₹4,10,000 | ₹3,00,000 | ₹1,10,000 |
Conclusion: With the new tax regime, a person with ₹24 lakh income will experience 1.1 lakh tax savings, reducing their overall tax liability to ₹3 lakh.
Tax Savings on ₹50 Lakh Income Due to Revised Slabs
For those earning ₹50 lakh, the new tax regime results in tax savings of ₹1.1 lakh, with their total tax payable decreasing from ₹11.9 lakh to ₹10.8 lakh.
Particulars | Current Tax (Old Regime) | Proposed Tax (New Regime) | Tax Saving |
Salary Income | ₹50,00,000 | ₹50,00,000 | ₹1,10,000 |
Tax Liability | ₹11,90,000 | ₹10,80,000 | ₹1,10,000 |
Conclusion: Even for high earners with a ₹50 lakh income, the tax payable is reduced by ₹1.1 lakh under the new structure, making the tax burden significantly lighter.
Summary of Tax Savings Due to New Tax Regime Slab Changes
Here’s a quick summary of the tax savings at various income levels due to the revised tax slabs under Budget 2025:
Income (₹) | Tax at Present Slab (₹) | Tax at Proposed Slab (₹) | Tax Saving (₹) |
₹12 lakh | ₹80,000 | ₹60,000 | No Tax |
₹16 lakh | ₹1,70,000 | ₹1,20,000 | ₹50,000 |
₹20 lakh | ₹2,90,000 | ₹2,00,000 | ₹90,000 |
₹24 lakh | ₹4,10,000 | ₹3,00,000 | ₹1,10,000 |
₹50 lakh | ₹11,90,000 | ₹10,80,000 | ₹1,10,000 |
How Budget 2025 Benefits the Middle-Class Taxpayer
The key takeaways from the Budget 2025 tax proposals are as follows:
- No tax on income up to ₹12 lakh: The increased tax rebate and new slabs ensure that taxpayers earning up to ₹12 lakh will have no tax liability.
- Substantial savings for middle-class: Taxpayers earning between ₹16 lakh and ₹24 lakh will see reductions of up to ₹1.1 lakh in taxes.
- Revised slabs boost household savings: With lower tax liabilities, the new tax structure will leave more money in the hands of taxpayers, stimulating savings, investments, and economic growth.
Conclusion: Maximizing Savings with the New Tax Regime
The tax changes introduced in Budget 2025 provide significant relief to salaried individuals across different income levels. From ₹12 lakh to ₹50 lakh, individuals will experience substantial tax savings, with the middle class benefiting the most due to the no-tax-up-to ₹12 lakh benefit and lower taxes for those with incomes above that level. By ensuring that more money remains in the hands of taxpayers, the new structure aims to support economic growth through increased consumption, savings, and investment.