If you are a salary employee, then your salary may increase in April. Under the Union Budget 2025-26, the annual income of up to Rs 12 lakh in the new tax regime has now been tax-free through special rebate. Also, income tax slabs for FY 2025-26 have also been changed. This will reduce the tax burden at different salary levels.
This means that your in-hand salary will increase from the first month of FY 2025-26 i.e. from April, because now your salary will be deducted less TDS. Let us understand how much your salary will increase according to your annual income.
Revised Income Tax Slab (New System) for FY 2025-26
| Income slab | Tax rate |
| ₹ 0-4 Lakh | Zero |
| ₹ 4-8 Lakh | 5% |
| ₹ 8-12 Lakh | 10% |
| ₹ 12-16 Lakh | 15% |
| ₹ 16-20 Lakh | 20% |
| ₹ 20-24 Lakh | 25% |
| More than ₹ 24 lakh | 30% |
The government has made a provision of full tax rebate for income of up to ₹ 12 lakhs under Section 87A of Income Tax. With this, they will not have to pay any income tax in FY 2025-26.
However, you have to note that it is not a rebate, but a rebate. This means that there will be tax calculation according to the first slab rate, then the tax liability will be abolished by giving a rebate. This relief will be for those with annual income of up to ₹ 12 lakh.
How much will your monthly salary increase?
| Annual salary | Annual tax savings |
Monthly additional salary |
| ₹ 12 lakhs | ₹ 80,000 | ₹ 6,650 |
| ₹ 16 Lakh | ₹ 50,000 | ₹ 4,150 |
| ₹ 18 lakhs | ₹ 70,000 | ₹ 5,830 |
| ₹ 20 lakhs | ₹ 90,000 | ₹ 7,500 |
| ₹ 25 Lakh | ₹ 1,10,000 | ₹ 9,150 |
| ₹ 50 Lakh | ₹ 1,10,000 | ₹ 9,150 |
Now for example, if your annual salary is ₹ 12 lakhs, then your monthly salary can increase by about ₹ 6,650 due to tax concession. Similarly, the salary of ₹ 16 lakh annual income will increase by about ₹ 4,150 per month. Those with ₹ 18 lakh income will now be additional ₹ 70,000 or about ₹ 5,830 per month.
Marginal Relief to those ‘slightly more than ₹ 12 lakhs’
Now an income of up to ₹ 12 lakh is tax-free, but even if your income is slightly more than this, you will still get a marginal relief. This means that tax on your extra income will not be more than your extra earnings.
- Income of ₹ 12.85 lakh → only ₹ 10,000 tax liability
- Income of ₹ 13.25 lakh → only ₹ 50,000 tax liability
- Income of ₹ 13.45 lakh → only ₹ 70,000 tax liability
Due to these changes in the tax rate, the government treasury will also get a big slap. The government is estimated to lose direct tax revenue revenue of about ₹ 1 lakh crore.
Note: These are estimated figures related to tax saving. You can consult your financial planner for accurate tax calculation.
Also read: ITR Filing 2025: When to get Form 16, Income Tax Return Filing will start?