Income Tax Calculation: How Much Will You Save Under New Slabs?
The new tax structure increases the threshold for the highest tax rate, so the 30% rate now applies only to incomes above Rs 24 lakh, up from Rs 15 lakh.
Income tax is a contribution that individuals and businesses make to the government based on their earnings or profits. It helps fund public services and infrastructure.
The amount paid depends on how much money you make — higher earnings usually lead to higher payments. In the Union Budget 2025, the government introduced significant revisions to the income tax slabs under the new tax regime, to provide much-needed relief to taxpayers.
Further, Finance Minister Nirmala Sitharaman also announced that annual income of up to Rs 12 lakh would be tax-free.
Revised Slabs For FY26 (Assessment Year 2026–27)
Income up to Rs 4 lakh: No tax payable.
Rs 4 lakh to Rs 8 lakh: Taxed at 5%.
Rs 8 lakh to Rs 12 lakh: Taxed at 10%.
Rs 12 lakh to Rs 16 lakh: Taxed at 15%.
Rs 16 lakh to Rs 20 lakh: Taxed at 20%.
Rs 20 lakh to Rs 24 lakh: Taxed at 25%.
Above Rs 24 lakh: Taxed at 30%.
The new tax structure increases the threshold for the highest tax rate, so the 30% rate now applies only to incomes above Rs 24 lakh, up from Rs 15 lakh. The basic exemption limit has been raised from Rs 3 lakh to Rs 4 lakh.
The standard deduction has been increased from Rs 50,000 to Rs 75,000. A significant change is the higher tax rebate under Section 87A. Taxpayers with a net taxable income of up to Rs 12 lakh can now claim a rebate of Rs 60,000, reducing their tax to zero. For salaried individuals, a standard deduction of Rs 75,000 makes incomes up to Rs 12.75 lakh tax-free.
The deduction for the employer's contribution to the National Pension System has been raised to 14% of the basic salary.
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Old Tax Regime
For individuals below 60 years
Up to Rs 2,50,000 – No tax
Rs 2,50,001 to Rs 5,00,000 – 5%
Rs 5,00,001 to Rs 10,00,000 – 20%
Above Rs 10,00,000 – 30%
For senior citizens (60-80 years)
Up to Rs 3,00,000 – No tax
Rs 3,00,001 to Rs 5,00,000 – 5%
Rs 5,00,001 to Rs 10,00,000 – 20%
Above Rs 10,00,000 – 30%
For super senior citizens (80+ years)
Up to Rs 5,00,000 – No tax
Rs 5,00,001 to Rs 10,00,000 – 20%
Above Rs 10,00,000 – 30%
How Much You Will Save Under New Tax Slab
Let's take an individual with an income of Rs 15,00,000 to see how much they would save under both regimes.
Under Old Regime:
Tax on Rs 2,50,000 to Rs 5,00,000 (5%): Rs 12,500.
Tax on Rs 5,00,000 to Rs 10,00,000 (20%): Rs 1,00,000.
Tax on Rs 10,00,000 to Rs 15,00,000 (30%): Rs 1,50,000.
Total Tax = Rs 12,500 + Rs 1,00,000 + Rs 1,50,000 = Rs 2,62,500
Under New Tax Regime
Tax on Rs 4,00,000 to Rs 8,00,000 (5%): Rs 20,000.
Tax on Rs 8,00,000 to Rs 12,00,000 (10%): Rs 40,000.
Tax on Rs 12,00,000 to Rs 15,00,000 (15%): Rs 45,000.
Total tax = Rs 20,000 + Rs 40,000 + Rs 45,000 = Rs 1,05,000.
Tax saved = Rs 2,62,500 (old regime) - Rs 1,05,000 (new regime) = Rs 1,57,500.
Another example is if the individual earns Rs 21,00,000, they will save Rs 2,22,500 under the new tax slab.
