Archive · 16 Jan 2026
Budget 2025: Tax Regime Overhaul Saves Taxpayers
In the Budget 2025, Finance Minister Nirmala Sitharaman made big changes to the income tax rules to help people save money.
Now, income up to Rs 4 lakh is tax-free, and the tax rates are lower for higher income levels.
The government also increased the rebate limit to Rs 12 lakh, which means people earning up to this amount pay no tax.
Additionally, a standard deduction of Rs 75,000 makes income up to Rs 12.75 lakh tax-free.
These changes help taxpayers save a lot of money, with some saving up to Rs 1.10 lakh.
The new tax regime is now the default option, making it easier for people to file their taxes without many deductions and exemptions.
High-income earners also benefit from a reduced surcharge.
Overall, these changes make the tax system simpler and leave more money in people's pockets.
Income up to Rs 4 lakh is tax-free under the new tax regime.
Tax rates are progressively lower, with the highest rate of 30% applying to income above Rs 24 lakh.
The rebate threshold under Section 87A has been increased to Rs 12 lakh, making income up to this amount tax-free.
A standard deduction of Rs 75,000 is available, making income up to Rs 12.75 lakh tax-free for salaried taxpayers.
High-income earners benefit from a reduced surcharge of 25% for those earning above Rs 5 crore.
- Who
- Finance Minister Nirmala Sitharaman
- What
- Overhaul of the new income tax regime
- When
- Budget 2025
- Where
- India
- Why
- To provide significant tax relief and simplify the tax structure for taxpayers
Taxpayers
Government
Tax Savings
Taxpayers
Taxpayers benefit from significant savings, with potential reductions of up to Rs 1.10 lakh for certain income groups.
Government
The government aims to simplify the tax regime and encourage wider adoption of the new tax structure.
- Tax-Free Income Threshold
- Rs 4 lakh
- Rebate Threshold
- Rs 12 lakh
- Standard Deduction
- Rs 75,000
- Maximum Tax Savings
- Rs 1.10 lakh
- Surcharge for High-Income Earners
- 25% (reduced from 37%)
- Default Tax Regime
- New Tax Regime
Sources
Budget 2026: How FM Sitharaman reshaped ULIP taxation in 2025 and what high premium investors must know
Budget recap: How much income tax relief FM Nirmala Sitharaman gave taxpayers last year? What to expect in Budget 2026?
Budget 2026: How FM Sitharaman’s 2025 tax slab overhaul helped taxpayers save up to Rs 1.10 lakh
Budget 2026: Wider slabs, gratuity taxation, NPS What’s next for tax after FM’s 2025 reforms
