How The New Income Tax Slabs Will Affect Your Take-Home Salary?

By lowering the total tax burden, the new tax regime's introduction of revised tax slabs for FY 2025-2026 is anticipated to have a major effect on your take-home salary. It is anticipated that the middle class will have less financial strain as a result of the amended tax slabs, which will increase their discretionary income and encourage investment, personal savings, and household spending. Higher monthly take-home pay is a direct result of the lower tax rates and greater rebate threshold. Individuals earning up to Rs 12 lakh or those without significant tax-saving investments would particularly benefit from the new tax regime's streamlined slabs and substantial rebates. So, according to tax experts' opinions, how will the new income tax slabs impact your take-home salary? Let's find out the answer here.

The introduction of revised tax slabs under the new tax regime for FY 2025-26 is expected to significantly impact your take-home salary by reducing the overall tax burden. Here's how the new slabs will apply as per Sujit Bangar Founder Taxbuddy.com

• Income up to Rs 4 lakh: No tax payable
• Rs 4 lakh to Rs 8 lakh: Tax rate of 5%
• Rs 8 lakh to Rs 12 lakh: Tax rate of 10%
• Rs 12 lakh to Rs 16 lakh: Tax rate of 15%
• Rs 16 lakh to Rs 20 lakh: Tax rate of 20%
• Rs 20 lakh to Rs 24 lakh: Tax rate of 25%
• Above Rs 24 lakh: Tax rate of 30%

Example:

Let's consider a person with an annual income of Rs 10 lakh. Under the new tax regime, as per Sujit Bangar Founder Taxbuddy.com:

• The first Rs 4 lakh is exempt from tax.
• The next Rs 4 lakh is taxed at 5%, resulting in Rs 20,000 in tax.
• The remaining Rs 2 lakh is taxed at 10%, leading to Rs 20,000 in tax.
• On Rs 40,000 you will receive a Rebate U/S 87A.
• Thus making tax Payable ZERO.

In total, the tax liability for an income of Rs 10 lakh would be ZERO as compared to a higher tax amount of Rs 72,500 (without cess @ 4%) under the old regime with standard deduction and Rs 1.5L under 80C. This lowers the overall tax and increases the person's take-home salary.

"The new tax slabs, especially for incomes up to Rs 12 lakh, will help increase your take-home salary by reducing your overall tax liability. However, taxpayers should carefully compare both regimes, considering their eligible deductions, to determine which regime will be more beneficial for them," said Sujit Bangar.

As per Charu Pahuja , CFP CM, Group Director & COO, Wise Finserv Pvt Ltd, the increased rebate threshold and reduced tax rates translate directly into higher monthly take-home pay. For instance:

• A salaried individual earning Rs 12 lakh now saves nearly Rs 60,000 annually.
• Someone earning Rs 20 lakh will see nearly Rs 90,000 in tax savings.

These changes offer greater liquidity, especially for young earners, professionals, and families who need funds for consumption or investments.

Conclusion

"The new tax regime, with its simplified slabs and generous rebates, is especially beneficial for individuals earning up to Rs 12 lakh or those who don't have major tax-saving investments. While the old regime still works for high-income earners with large deductions, the new structure offers ease, efficiency, and enhanced monthly income. Make sure to evaluate both regimes annually and choose the one that aligns best with your income pattern and financial goals," commented Charu Pahuja.

The revised tax slabs are expected to reduce the financial burden for the middle class, giving them more disposable income which will help in boosting household consumption, increasing personal savings, and spurring investment, according to CA Muskkan Kukreja, Assistant Director & Program Co-ordinator- Accounting and Finance, Dr. Shantilal K Somaiya School of Commerce and Business Studies, Somaiya Vidyavihar University.