New income tax slabs: From when is it applicable for salaried individuals? Check details here

Budget 2025, Income Tax Slab Update: Finance Minister Nirmala Sitharaman in her Union Budget 2025 speech announced new income tax slabs for salaried individuals. As per Sitharaman, under the New Tax Regime, taxpayers with income up to ₹12 lakhs are now exempted.

We take a look at what the new income tax slabs are, from when it is applicable for salaried individuals, what this means, and other details.

What Did Finance Minister Nirmala Sitharaman Say?

In her budget statement, Finance Minister Nirmala Sitharaman declared that under the new tax regime, those earning up to ₹12 lakh would not be eligible for taxes.

For incomes up to ₹12 lakh ( ₹12.75 lakh for salaried taxpayers with a basic deduction of ₹75,000), the new tax regime gives ZERO or “nil” income tax.

The government has established new tax slabs under the New Regime to “significantly lower middle-class taxes and give them more money, which will increase household consumption, savings, and investment”, she said.

What Are the Income Tax Slab Changes in Budget 2025?

The tax slabs and rates announced by Sitharaman in her record eighth consecutive Union Budget speech are as follows:

• ₹0-4 lakh: Nil
• ₹4-8 lakh: 5 per cent
• ₹8-12 lakh: 10 per cent
• ₹12-16 lakh: 15 per cent
• ₹16-20 lakh: 20 per cent
• ₹20-24 lakh: 25 per cent
• And above ₹24 lakh: 30 per cent

How Do These New Income Tax Slabs Work?

Under the new tax regime, individuals earning up to ₹12 lakh annually will not have to pay any income tax. As per the rejig, for people earning more than ₹12 lakh per annum, there will be nil tax for income up to ₹4 lakh, 5 per cent for income between ₹4 and 8 lahks, 10 per cent for ₹8-12 lakh, and 15 per cent for ₹12-16 lakh.

A 20 per cent income tax will be levied on income between ₹16 and 20 lakh, 25 per cent on ₹20-24 lakh and 30 per cent above ₹24 lakh per annum.

From When Is the New Income Tax Slab and Rates Application From?

The new tax slabs are applicable from FY25-26, or as indicated on the income tax portal as AY26-27 (Assessment Year 2026-27).