In the 2025-26 budget, the in-hand salary will increase from April 2025 due to the tax free rebate on annual income up to Rs 12 lakh. The new tax slabs will reduce tax at every income level and there will be a good increase in the monthly salary.
If you are a salaried employee, then your salary may increase in April. Under the Union Budget 2025-26, in the new tax regime, annual income up to Rs 12 lakh has now been made tax-free through a special rebate. Also, changes have been made in the income tax slabs for the financial year 2025-26. This will reduce the tax burden at different salary levels.
This means that your in-hand salary will increase from the first month of the financial year 2025-26 i.e. April, because now less TDS will be deducted from your salary. 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% |
| Above ₹24 lakh | 30% |
The government has made a provision of full tax rebate for those having income up to ₹ 12 lakh under section 87A of Income Tax. Due to this, they will not have to pay any income tax in the financial year 2025-26.
However, you must note that this is not an exemption in tax, but a rebate. This means that first the tax will be calculated according to the slab rate, then the tax liability will be eliminated by giving rebate. This relief will be for those with an annual income of up to ₹ 12 lakh.
How much will your monthly salary increase?
| Annual Salary | Annual tax savings |
Monthly additional salary
|
| ₹12 Lakh | ₹80,000 | ₹6,650 |
| ₹16 Lakh | ₹50,000 | ₹4,150 |
| ₹18 Lakh | ₹70,000 | ₹5,830 |
| ₹20 Lakh | ₹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 lakh, then due to tax exemption your monthly salary can increase by about ₹6,650. Similarly, those with an annual income of ₹16 lakh will see an increase of about ₹4,150 per month in their salary. Those with an income of ₹18 lakh will now get an additional ₹70,000 annually or about ₹5,830 per month.
Marginal relief for those earning ‘a little over ₹12 lakh’
Now income up to ₹12 lakh is tax-free, but if your income is slightly higher than this, you will still get marginal relief. This means that the tax on your additional income will not be more than your additional income.
- Income of ₹12.85 lakh → Tax liability of only ₹10,000
- Income of ₹13.25 lakh → Tax liability of only ₹50,000
- Income of ₹13.45 lakh → Tax liability of only ₹70,000
Due to these changes in tax rates, the government treasury will also suffer a huge loss. The government is estimated to lose direct tax revenue of about ₹ 1 lakh crore.
Note: These are estimated figures related to tax savings. You can consult your financial planner for accurate tax calculations.
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