Is your salary between Rs 8-25 lakh? See how much tax you'll save this year

The 2025 Union Budget has brought in major changes to the income tax structure, offering relief to a broad range of taxpayers. The adjustments, particularly beneficial for middle-income earners, increase the rebate threshold and reduce tax liability across various income brackets.  

 

“The Union Budget 2025 brings notable tax relief, particularly for middle-income earners. For instance, an individual earning up to Rs 12 lakh annually will now pay zero tax, benefiting from a full rebate under section 87A, compared to Rs 80,000 under the previous regime. Similarly, someone earning Rs 12.5 lakh will see their tax outgo reduced from Rs 90,000 to Rs 67,500, saving Rs 22,500,” said Neeraj Tripathi, head of taxation at Policybazaar.  

 

“Higher-income individuals also benefit. For instance, a taxpayer with Rs 16 lakh income will now save Rs 50,000 annually. These revisions ensure that taxpayers across various income brackets retain a greater portion of their earnings, boosting disposable income and fostering economic growth,” he added.  

 

How much will taxpayers save?  

 

Shefali Mudra, tax expert at Clear Tax, explained how the changes impact different salary levels.  

 

Salary: Rs 8 lakh per annum

 

For individuals earning Rs 8,00,000, the new structure offers immediate relief. Under the previous system, a taxpayer was liable to pay Rs 30,000; now, due to an increased rebate threshold, that liability vanishes for incomes below Rs 12 lakh. This change allows middle-income earners to retain more of their earnings. 

 

Salary: Rs 12.5 lakh per annum

 

Those with an annual income of Rs 12,50,000 experience a notable reduction in their tax obligations. Previously, the payable tax amounted to Rs 90,000, but under the revised rates it falls to Rs 50,000 – a saving of Rs 40,000. Adjustments in the slab rates, along with the application of marginal relief provisions, work together to ease the tax burden for this group. 

 

Salary: Rs 16 lakh per annum

 

Individuals earning Rs 16,00,000 per annum also benefit from the revised regime. The earlier tax liability of Rs 1,70,000 has been reduced to Rs 1,20,000, resulting in a saving of Rs 50,000. By reallocating the higher rates across defined income segments, the new system adopts a more measured approach to taxing higher incomes. 

 

Salary Rs 25 lakh per annum

 

For those with an income of Rs 25,00,000, the benefits are even more pronounced. The previous regime demanded a tax payment of Rs 4,40,000, whereas the new rates bring it down to Rs 3,30,000 – a reduction of Rs 1,10,000. This saving arises because the highest rate is now applied only to income exceeding Rs 24 lakh, allowing high earners to retain a larger share of their income. 

 

 Should taxpayers opt for the old or new regime?  

 

“Taxpayers with fewer deductions or simpler financial situations may find the new regime more beneficial due to lower tax rates and the increased basic exemption limit. Those with deductions exceeding Rs 7,75,000 will likely find the old regime more favourable,” said Mudra.  

 

“The change in tax slabs simplifies the tax process. However, each taxpayer should evaluate their personal finances and deductions under both regimes to decide which works best for them,” she added.    "The Budget 2025 provides significant tax relief across income levels, particularly benefiting those earning between Rs 8 lakh and Rs 25 lakh. However, individuals who claim multiple deductions, such as those under 80C, 80D, and HRA, may still find the old tax regime more beneficial. The choice between the two regimes depends on one’s financial profile, deductions, and investment preferences," said Ranjeet Gupta, a chartered accountant and senior finance manager at BINDZ Consulting.