How Income Tax Slabs Will Benefit Tax Payers at Different Salary Levels

The Union Budget 2025 has introduced significant changes to the income tax regime, making taxation more favorable for salaried individuals. With revised slabs and increased rebates, taxpayers across different income levels will experience substantial savings, allowing for better financial planning and improved disposable income.

Let’s understand how the proposed income tax slabs will benefit tax payers at different salary levels

Tax Benefits at Different Salary Levels

1. ₹6,00,000 Salary FY 2025-2026

• Income: ₹6,00,000
• Less: Standard Deduction: ₹75,000
• Total Income: ₹5,25,000

Income Tax Calculation:

• 0 to ₹4,00,000:  0%
• ₹4,00,000 to ₹8,00,000: 5% of (₹5,25,000 – ₹4,00,000) = ₹6,250

• Basic Tax Payable: ₹6,250
• Less: Rebate under Section 87A: ₹6,250
• Tax Payable: ₹0
• Add: Education Cess @ 4%: ₹0
• Total Tax Payable: ₹0

₹6,00,000 Salary FY 2024-2025

• Income: ₹6,00,000
• Less: Standard Deduction: ₹75,000
• Total Income: ₹5,25,000

Income Tax Calculation:

• 0 to ₹3,00,000: 0%
• ₹3,00,000 to ₹7,00,000: 5% of (₹5,25,000 – ₹3,00,000) = ₹11,250

• Basic Tax Payable: ₹11,250
• Less: Rebate under Section 87A: ₹11,250
• Tax Payable: ₹0
• Add: Education Cess @ 4%: ₹0
• Total Tax Payable: ₹0

For FY 2025-2026, taxpayers with ₹6,00,000 income pay no tax, thanks to the increased rebate under Section 87A. This is a notable benefit over FY 2024-2025, where ₹6,00,000 salary resulted in ₹6,250 tax liability after rebate.

2. ₹12,00,000 Salary FY 2025-2026

• Income: ₹12,00,000
• Less: Standard Deduction: ₹75,000
• Total Income: ₹11,25,000

Income Tax Calculation:

• 0 to ₹4,00,0000: 0%
• ₹4,00,000 to ₹8,00,000: 5% of (₹8,00,000 -₹4,00,000) = ₹20,000
• ₹8,00,000 to ₹12,00,000: 10% of (₹11,25,000 – ₹8,00,000) = ₹32,500

• Basic Tax Payable: ₹20,000 + ₹32,500 = ₹52,500
• Less: Rebate under Section 87A: ₹52,500
• Tax Payable: ₹0
• Add: Education Cess @ 4%: ₹0
• Total Tax Payable: ₹0

₹12,00,000 Salary FY 2024-2025

• Income: ₹12,00,000
• Less: Standard Deduction: ₹75,000
• Total Income: ₹11,25,000

Income Tax Calculation:

• ₹0 to ₹3,00,000: 0
• ₹3,00,000 to ₹7,00,000: 5% of (₹7,00,000 – ₹3,00,000) = ₹20,000
• ₹7,00,000 to ₹10,00,000: 10% of (₹10,00,000 – ₹7,00,000) = ₹30,000
• ₹10,00,000 to ₹12,00,000: 15% of (₹11,25,000 – ₹10,00,000) = ₹18,750

• Basic Tax Payable: ₹20,000 + ₹30,000 + ₹18,750 = ₹68,750
• Less: Rebate under Section 87A: ₹0
• Tax Payable: ₹68,750
• Add: Education Cess @ 4%: ₹2,750
• Total Tax Payable: ₹68,750 + ₹2,750 = ₹71,500

In FY 2025-2026, the tax payable for ₹12,00,000 income is reduced to zero, whereas in FY 2024-2025, it was ₹71,500, resulting in a significant tax saving of ₹71,500 compared to the previous year.. The new tax structure eliminates the 15% tax slab, offering a significant reduction in tax burden. In addition, the increase in tax rebate and also allowing tax rebate to individuals earning upto ₹12,00,000

3. ₹15,00,000 Salary FY 2025-2026

• Income: ₹15,00,000
• Less: Standard Deduction: ₹75,000
• Total Income: ₹14,25,000

Income Tax Calculation:

• 0 to ₹4,00,000: 0%
• ₹4,00,000 to ₹8,00,000: 5% of (₹8,00,000 – ₹4,00,000) = ₹20,000
• ₹8,00,000 to ₹12,00,000: 10% of (₹12,00,000 – ₹8,00,000) = ₹40,000
• ₹12,00,000 to ₹16,00,000: 15% of (₹14,25,000 – ₹12,00,000) = ₹33,750

• Basic Tax Payable: ₹20,000 + ₹40,000 + ₹33,750 = ₹93,750
• Less: Rebate under Section 87A: ₹0
• Tax Payable: ₹93,750
• Add: Education Cess @ 4%: ₹3,750
• Total Tax Payable: ₹93,750 + ₹3,750 = ₹97,500

₹15,00,000 Salary FY 2024-2025

• Income: ₹15,00,000
• Less: Standard Deduction: ₹75,000
• Total Income: ₹14,25,000

Income Tax Calculation:

• ₹0 to ₹3,00,000: 0
• ₹3,00,000 to ₹7,00,000: 5% of (₹7,00,000 – ₹3,00,000) = ₹20,000
• ₹7,00,000 to ₹10,00,000: 10% of (₹10,00,000 – ₹3,00,000) = ₹30,000
• ₹10,00,000 to ₹12,00,000: 15% of (₹10,00,000 – ₹12,00,000) = ₹30,000
• ₹12,00,000 to ₹15,00,000: 20% of (₹14,25,000 – ₹12,00,000) = ₹45,000

Basic Tax Payable: ₹20,000 + ₹30,000 + ₹30,000 + ₹45,000 = ₹1,25,000

• Less: Rebate under Section 87A: ₹0
• Tax Payable: ₹1,25,000
• Add: Education Cess @4%: = ₹5,000
• Total Tax Payable: ₹1,25,000 + ₹5,000 = ₹1,30,000

For FY 2025-2026, taxpayers with ₹15,00,000 income pay ₹97,500, significantly less than the ₹1,30,000 payable in FY 2024-2025. The revised tax brackets result in reduced taxes for those falling within the ₹12,00,000 to ₹15,00,000 range. The new tax regime offers a saving of ₹32,500 due to a reduction in tax liability for this salary level.

4. ₹18,00,000 Salary FY 2025-2026

• Income: ₹18,00,000
• Less: Standard Deduction: ₹75,000
• Total Income: ₹17,25,000

Income Tax Calculation:

• 0 to ₹4 ,00,000: 0%
• ₹4 ,00,000 to ₹8,00,000: 5% of (8,00,000 – ₹4,00,000) = ₹20,000
• ₹8,00,000 to ₹12,00,000: 10% of (₹12,00,000 – ₹8,00,000) = ₹40,000
• ₹12,00,000 to ₹16,00,000: 15% of (₹16,00,000 – ₹12,00,000) = ₹60,000
• ₹16,00,000 to ₹20,00,000: 20% of (₹17,25,000 – ₹16,00,000) = ₹25,000

• Basic Tax Payable: ₹20,000 + ₹40,000 + ₹60,000 + ₹25,000 = ₹1,45,000
• Less: Rebate under Section 87A: ₹0
• Tax Payable: ₹1,45,000
• Add: Education Cess @ 4%: ₹5,800
• Total Income Tax Payable: ₹1,45,000+ ₹5,800 = ₹1,50,800

₹18,00,000 Salary FY 2024-2025

• Income: ₹18,00,000
• Less: Standard Deduction: ₹75,000
• Total Income: ₹17,25,000

Income Tax Calculation:

• ₹3,00,000 to ₹7,00,000: 5% of (₹7,00,000 -₹3,00,000) = ₹20,000
• ₹7,00,000 to ₹10,00,000: 10% of (₹10,00,000 – ₹7,00,000) = ₹30,000
• ₹10,00,000 to ₹12,00,000: 15% of (₹12,00,000 – ₹10,00,000) = ₹30,000
• ₹12,00,000 to ₹15,00,000: 20% of (₹15,00,000 – ₹12,00,000) = ₹60,000
• Above ₹15,00,000: 30% of (₹17,25,000 – ₹15,00,000) = ₹67,500

• BasicTax Payable: ₹20,000 + ₹30,000 + ₹30,000 + ₹60,000 + ₹67,500 = ₹2,07,500
• Less: Rebate under Section 87A: ₹0
• Tax Payable: ₹2,07,500
• Add: Education Cess @4%: ₹8,300
• Total Tax Payable: ₹2,07,500 + ₹8,300 = ₹2,15,800

In FY 2025-2026, the tax liability for ₹18,00,000 income is ₹1,50,800, down from ₹2,15,800 in FY 2024-2025. The new tax structure reduces the effective tax rates across multiple slabs, benefiting higher-income earners. The tax payable is reduced by ₹65,000 in FY 2025-2026, providing a significant benefit to those in this salary range.

5. ₹25,00,000 Salary FY 2025-2026

• Income: ₹25,00,000
• Less: Standard Deduction: ₹75,000
• Total Income: ₹24,25,000

Income Tax Calculation:

• 0 to ₹4,00,000: 0%
• ₹4,00,000 to ₹8,00,000: 5% of (₹8,00,000 – ₹4,00,000) = ₹20,000
• ₹8,00,000 to ₹12,00,000: 10% of (₹12,00,000 – ₹8,00,000) = ₹40,000
• ₹12,00,000 to ₹16,00,000: 15% of (₹16,00,000 – ₹12,00,000) = ₹60,000
• ₹16,00,000 to ₹20,00,000: 20% of (₹20,00,000 – ₹16,00,000) = ₹80,000
• ₹20,00,000 to ₹24,00,000: 25% of (₹24,00,000 – ₹20,000,000) = ₹1,00,000
• Above ₹24 ,00,000: 30% of (₹24,25,000 – ₹24,00,000) = ₹7,500

• Basic Tax Payable: ₹20,000 + ₹40,000 + ₹60,000 + ₹80,000 + ₹1,00,000 + ₹7,500 = ₹3,07,500
• Less: Rebate under Section 87A: ₹0
• Tax Payable: ₹3,07,500
• Add: Education Cess @ 4%: ₹12,300
• Total Tax Payable: ₹3,07,500 + ₹12,300 = ₹3,19,800

₹25,00,000 Salary FY 2024-2025

• Income: ₹25,000,000
• Less: Standard Deduction: ₹75,000
• Total Income: ₹24,25,000

Income Tax Calculation:

• ₹3,00,000 to ₹7,00,000: 5% of ( ₹7,00,000 – ₹3,00,000) = ₹20,000
• ₹7,00,000 to ₹10,00,000: 10% of (₹10,00,000 – ₹7,00,000) = ₹30,000
• ₹10,00,000 to ₹12,00,000: 15% of (₹12,00,000 – ₹10,00,000) = ₹30 000
• ₹12,00,000 to ₹15,00,000: 20% of (₹15,00,000 – ₹12,00,000) = ₹60,000
• Above ₹15,00,000: 30% of (₹24,25,000 – ₹15,00,000) = ₹2,77,500

• Basic Tax Payable: ₹20,000 + ₹30,000 + ₹30,000 + ₹60,000 + ₹2,77,500 = ₹4,17,500
• Less: Rebate under Section 87A: ₹0
• Tax Payable: ₹4,17,500
• Add: Education Cess @ 4%: ₹16,700
• Total Tax Payable: ₹4,17,500 + ₹17,600 = ₹4,34,200

For FY 2025-2026, the tax payable on ₹25,00,000 income is ₹3,19,800, significantly reduced from ₹3,84,800 in FY 2024-2025. The tax changes, including a more favourable 25% slab, help reduce the burden for high-income earners. The tax saving for individuals earning ₹25,00,000 is ₹29,800, thanks to a reduction in the tax burden in FY 2025-2026.

6. ₹50,00,000 Salary FY 2025-2026

• Income: ₹50,00,000
• Less: Standard Deduction: ₹75,000
• Total Income: ₹49,25,000

Income Tax Calculation:

• 0 to ₹4,00,000: 0%
• ₹4,00,000 to ₹8,00,000: 5% of (₹8,00,000 – ₹4,00,000) = ₹20,000
• ₹8,00,000 to ₹12,00,000: 10% of (₹12,00,000 – ₹8,00,000) = ₹40,000
• ₹12,00,000 to ₹16,00,000: 15% of (₹16,00,000 – ₹12,00,000) = ₹60,000
• ₹16,00,000 to ₹20,00,000: 20% of (₹20,00,000 – ₹16,00,000) = ₹80,000
• ₹20,00,000 to ₹24,00,000: 25% of (₹24,00,000 – ₹20,000,000) = ₹1,00,000

• Above ₹24 ,00,000: 30% of (₹49,25,000 – ₹24,00,000) = ₹7,57,500

• Basic Tax Payable: ₹20,000 + ₹40,000 + ₹60,000 + ₹80,000 + ₹1,00,000 + ₹7,57,500 = ₹10,57,500
• Less: Rebate under Section 87A: ₹0
• Tax Payable: ₹10,57,500
• Add: Education Cess @ 4%: ₹42,300
• Total Tax Payable: ₹10,57,500 + ₹42,300 = ₹10,99,800

₹50,00,000 Salary FY 2024-2025

• Income: ₹50,00,000
• Less: Standard Deduction: ₹75,000
• Total Income: ₹49,25,000

Income Tax Calculation:

• ₹0 to ₹3,00,000: 0
• ₹3,00,000 to ₹7,00,000: 5% of ( ₹7,00,000 – ₹3,00,000) = ₹20,000
• ₹7,00,000 to ₹10,00,000: 10% of (₹10,00,000 – ₹7,00,000) = ₹30,000
• ₹10,00,000 to ₹12,00,000: 15% of (₹12,00,000 – ₹10,00,000) = ₹30 000
• ₹12,00,000 to ₹15,00,000: 20% of (₹15,00,000 – ₹12,00,000) = ₹60,000
• Above ₹15,00,000: 30% of (49,25,000 – ₹15,00,000) = ₹10,27,500

• Basic Tax Payable: ₹20,000 + ₹30,000 + ₹30,000 + ₹60,000 + ₹10,27,500 = ₹11,67,500
• Less: Rebate under Section 87A: ₹0
• Tax Payable: ₹11,67,500
• Add: Education Cess @ 4%: ₹46,700
• Total Tax Payable: ₹11,67,500 + ₹47,600 = ₹12,14,200

For FY 2025-2026, the tax payable on ₹50,00,000 income is ₹10,99,800, significantly reduced from ₹12,14,200 in FY 2024-2025. The tax changes, including revised slab rates, help reduce the burden for high-income earners. The tax saving for individuals earning ₹50,00,000 is ₹1,14,400, thanks to a reduction in the tax burden in FY 2025-2026.

Conclusion

The revised tax slabs introduced in Budget 2025 provide significant relief to salaried employees, especially those earning up to Rs 12.75 lakh, who will pay no tax. Higher-income groups will also benefit from reduced tax liabilities, increasing their disposable income. These changes aim to boost household consumption, savings, and investments, driving economic growth. With simplified tax calculations and reduced rates, the new tax regime is set to become the preferred choice for most taxpayers in the coming years.