The 2025 Union Budget has brought some exciting news for the middle class! Finance Minister Nirmala Sitharaman has restructured the tax slabs, giving major relief to salaried and self-employed individuals. If your annual income is up to ₹12 lakh, you won’t have to pay any income tax under the new tax regime. Plus, even if you earn more than ₹12 lakh, you can still enjoy tax benefits thanks to revised slabs and marginal relief.
So, what’s changing? Let’s break it down in simple terms.
What’s New in the Tax Slabs?
The new tax regime provides zero tax for incomes up to ₹12 lakh, with different slabs for higher earnings:
| Annual Income (₹) | Tax Rate (%) |
|---|---|
| 0 – 4 lakh | 0% |
| 4 – 8 lakh | 5% |
| 8 – 12 lakh | 10% |
| 12 – 16 lakh | 15% |
| 16 – 20 lakh | 20% |
| 20 – 24 lakh | 25% |
| Above 24 lakh | 30% |
If you earn exactly ₹12 lakh, you save ₹80,000 compared to the previous tax structure. If you earn ₹24 lakh or more, your total tax savings can be ₹1,10,000!
But what if your income is slightly above ₹12 lakh? This is where marginal relief comes into play.
What is Marginal Relief?
Marginal relief ensures that if your income is just above ₹12 lakh, you don’t lose out on tax benefits drastically.
For example, if your income is ₹12,10,000:
- Your total tax would be ₹61,500 under the new slabs.
- Since your income only increased by ₹10,000 over the ₹12 lakh limit, paying ₹61,500 in extra tax doesn’t make sense.
- Marginal relief reduces this tax burden—so instead of ₹61,500, you will pay only ₹10,000 in tax!
This means, if your income is just slightly above ₹12 lakh, you won’t face an unfairly high tax jump. However, as your income approaches ₹12.75 lakh, the relief reduces, and after that, the normal tax rates apply.
What About Standard Deduction?
For salaried individuals, the standard deduction of ₹75,000 still applies. This means that if your gross salary is ₹12.75 lakh, after deduction, your taxable income falls to ₹12 lakh, and you don’t pay any tax at all.
| Total Income (₹) | Current Tax (₹) | Revised Tax (₹) | Benefit from Slab Change (₹) | Rebate (₹) | Total Savings (₹) | Final Tax Payable (₹) |
|---|---|---|---|---|---|---|
| 8,00,000 | 30,000 | 20,000 | 10,000 | 20,000 | 30,000 | 0 |
| 9,00,000 | 40,000 | 30,000 | 10,000 | 30,000 | 40,000 | 0 |
| 10,00,000 | 50,000 | 40,000 | 10,000 | 40,000 | 50,000 | 0 |
| 11,00,000 | 65,000 | 50,000 | 15,000 | 50,000 | 65,000 | 0 |
| 12,00,000 | 80,000 | 60,000 | 20,000 | 60,000 | 80,000 | 0 |
| 13,00,000 | 1,00,000 | 75,000 | 25,000 | 0 | 25,000 | 75,000 |
| 14,00,000 | 1,20,000 | 90,000 | 30,000 | 0 | 30,000 | 90,000 |
| 15,00,000 | 1,40,000 | 1,05,000 | 35,000 | 0 | 35,000 | 1,05,000 |
| 16,00,000 | 1,70,000 | 1,20,000 | 50,000 | 0 | 50,000 | 1,20,000 |
| 17,00,000 | 2,00,000 | 1,40,000 | 60,000 | 0 | 60,000 | 1,40,000 |
| 18,00,000 | 2,30,000 | 1,60,000 | 70,000 | 0 | 70,000 | 1,60,000 |
| 19,00,000 | 2,60,000 | 1,80,000 | 80,000 | 0 | 80,000 | 1,80,000 |
| 20,00,000 | 2,90,000 | 2,00,000 | 90,000 | 0 | 90,000 | 2,00,000 |
| 21,00,000 | 3,20,000 | 2,25,000 | 95,000 | 0 | 95,000 | 2,25,000 |
| 22,00,000 | 3,50,000 | 2,50,000 | 1,00,000 | 0 | 1,00,000 | 2,50,000 |
| 23,00,000 | 3,80,000 | 2,75,000 | 1,05,000 | 0 | 1,05,000 | 2,75,000 |
| 24,00,000 | 4,10,000 | 3,00,000 | 1,10,000 | 0 | 1,10,000 | 3,00,000 |
| 25,00,000 | 4,40,000 | 3,30,000 | 1,10,000 | 0 | 1,10,000 | 3,30,000 |
