Revised Income Tax Regime for FY 2025-26: Everything You Need to Know

New tax regime 2025, The Indian government has introduced significant changes to the income tax regime for the financial year 2025-26, impacting salaried individuals, professionals, and business owners. These revisions aim to simplify tax calculations, increase disposable income, and boost economic growth. This article provides a comprehensive guide to the revised tax slabs, deductions, benefits, and key implications for taxpayers under the new tax regime.

new tax regime 2025

New Income Tax Slabs for FY 2025-26

The revised tax structure introduces new slabs to ensure a balanced tax burden across different income levels. Below is a breakdown of the updated tax rates:

Annual Income Range (INR)	Tax Rate (%)
Up to 12,00,000	Nil
12,00,001 - 15,00,000	10%
15,00,001 - 18,00,000	15%
18,00,001 - 21,00,000	20%
21,00,001 - 24,00,000	25%
Above 24,00,000	30%

Key Highlights:

Higher Exemption Limit: Income up to INR 12,00,000 is now tax-free, benefiting middle-class taxpayers.
Reduced Tax Rates: Lower rates for different income slabs ease the financial burden on salaried individuals.
Progressive Taxation: Ensures higher-income individuals contribute more while providing relief to lower-income earners.

Standard Deduction and Additional Benefits

Under the new tax regime, salaried individuals and pensioners will continue to benefit from the standard deduction of INR 75,000. This means an individual earning INR 12,90,000 will have a taxable income of INR 12,15,000 after deductions.

Other Benefits:

No tax up to INR 12,75,000 (for salaried employees after standard deduction)
Simplified tax filing process
No need to invest in tax-saving instruments for deductions, offering greater financial flexibility

Tax Calculation Example

Let's understand how tax liability is calculated under the new regime for an individual earning INR 12,90,000 annually:

Standard Deduction: INR 12,90,000 - INR 75,000 = INR 12,15,000 (Taxable Income)
Tax Slab Calculation:

INR 12,00,000: No tax
INR 12,00,001 - INR 12,15,000: Taxed at 10% = INR 1,500

Total Tax Payable: INR 1,500

Differences Between the Old and New Tax Regimes

Feature	Old Regime	New Regime (FY 2025-26)
Exemption Limit	INR 2,50,000	INR 12,00,000
Standard Deduction	INR 50,000	INR 75,000
Tax-Saving Deductions	Available (80C, 80D, etc.)	Not applicable
Tax Slabs	Higher rates	Lower rates

Impact on Different Taxpayers

For Salaried Employees

Increased exemption limit reduces tax liability.
No need to invest in specific tax-saving instruments.
More take-home salary and financial flexibility.

For Business Owners & Self-Employed

Simplified tax calculations.
No requirement for complicated deductions.
Potential for reinvestment in business growth.

For High-Income Earners

Higher tax rates for income above INR 24,00,000.
More contributions towards economic growth.

Steps to File Taxes Under the New Regime

Calculate Gross Income: Sum up all sources of income.
Apply Standard Deduction: Deduct INR 75,000 for salaried individuals.
Determine Taxable Income: Identify applicable tax slabs.
Calculate Tax Payable: Apply respective tax rates.
File Tax Returns: Use the Income Tax Department’s e-filing portal.

Expert Opinions and Market Reactions

Financial analysts believe the revised tax structure will boost consumption and savings, leading to economic expansion. Experts also recommend that taxpayers evaluate their tax liabilities under both regimes before making a decision.

Conclusion

The revised income tax regime for FY 2025-26 simplifies tax calculations and provides significant benefits, especially for middle-class taxpayers. With increased exemption limits, a higher standard deduction, and lower tax rates, individuals now have greater financial flexibility. However, high-income earners may see a slight increase in tax liability. Taxpayers must carefully evaluate the best approach to optimize savings and tax benefits.

Call to Action

Do you want to know how the new tax regime affects your specific financial situation? Use online tax calculators or consult a financial expert to plan your tax strategy efficiently.