Revised Personal Income Tax Structure under New Tax Regime from FY 2025-26: A look at changes introduced by Finance Act, 2025
A quick glance at the Budget promises (2025-2026) delivered by the CBDT, introducing comprehensive changes to personal tax structure.
The Finance Act, 2025 introduced changes to the personal income tax structure under the New Tax Regime (NTR), providing income tax relief to middle-class taxpayers. The revised provisions are effective from the financial year 2025-26, corresponding to the assessment year 2026-27.
The Ministry of Finance stated that the changes aim to leave more money in the hands of taxpayers and rationalise tax rates.
Under the revised New Tax Regime, no income tax will be payable on total income upto ₹12 lakh, excluding special rate income such as capital gains. This means that individuals earning an average income of ₹1 lakh per month will not be required to pay income tax under the new regime.
For salaried taxpayers, the tax-free income limit has been increased to ₹12.75 lakh, taking into account the standard deduction of ₹75,000.
The New Tax Regime also proposes the following changes to income tax slabs:
| Income Slab (₹) | Tax Rate |
| 0 - 4 lakh | Nil |
| 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 tax slabs have been revised to reduce the effective tax burden across income levels. The revised personal income tax structure under the New Tax Regime forms part of the government’s efforts to simplify the tax system and encourage adoption of the new regime.
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