Budget 2025 in 5 Minutes — What Changed for Your Taxes
New tax slabs, ₹60k rebate up to ₹12L income, marginal relief, capital gains rates and TDS thresholds — every change that affects individual taxpayers, explained simply.
Budget 2025 was a turning point for the middle class. The new tax regime now offers zero income tax up to ₹12 lakh taxable income (or ₹12.75 lakh salary, after standard deduction). Here's every change that affects individual taxpayers and what you should do about it.
1. New tax slabs (the headline change)
| Taxable Income | Rate |
|---|---|
| Up to ₹4,00,000 | Nil |
| ₹4,00,001 – ₹8,00,000 | 5% |
| ₹8,00,001 – ₹12,00,000 | 10% |
| ₹12,00,001 – ₹16,00,000 | 15% |
| ₹16,00,001 – ₹20,00,000 | 20% |
| ₹20,00,001 – ₹24,00,000 | 25% |
| Above ₹24,00,000 | 30% |
Old regime is unchanged: ₹2.5L exemption, then 5% / 20% / 30%.
2. 87A rebate raised to ₹60,000
Under the new regime, anyone with taxable income up to ₹12 lakh gets a Section 87A rebate of up to ₹60,000. So if your tax-on-slab would be ₹60k, the rebate wipes it out — net tax = zero.
For salaried people with ₹75,000 standard deduction, this means gross salary up to ₹12.75 lakh attracts zero income tax. A huge win for middle-income households.
3. Marginal relief — the "just above ₹12L" cushion
What if your income is ₹12,10,000? Without marginal relief, tax would jump from zero to ~₹61,500 — a cliff. Budget 2025 introduced marginal relief: your tax cannot exceed the income above ₹12L. So at ₹12.1L, you pay only ₹10,000 (the excess), not ₹61,500.
This relief tapers off by ~₹12.75L — after that, regular slab tax applies.
4. Standard deduction stays at ₹75,000 (new regime)
For salaried and pensioners. Old regime continues at ₹50,000. Combined with the ₹12L rebate threshold → ₹12.75L gross salary = zero tax under new regime.
5. Capital gains (no change in Budget 2025)
Budget 2024 rates carry forward unchanged:
- Equity LTCG (over 1 year): 12.5% on gains above ₹1.25 lakh per year
- Equity STCG (under 1 year): 20%
- Debt MF, gold, property LTCG: 12.5%, no indexation (sold on/after 23 July 2024). For property bought before 23 Jul 2024, you can opt for 20% with indexation.
Calculate your liability using our capital gains calculator.
6. TDS threshold revisions
- Sec 194-IB (rent by individual): threshold raised to ₹50,000/month from ₹50,000 inclusive cap
- Sec 194 (dividend): threshold ₹10,000 retained
- Sec 194A (FD interest): ₹40k → ₹50k (non-senior); ₹50k → ₹1L (senior)
7. What you should actually do
- Check which regime wins for you. If your gross salary is under ₹12.75L, the new regime almost certainly wins. Use our income tax calculator.
- Review your salary structure. If you're moving to the new regime, HRA exemption no longer helps — you can ask HR to convert HRA into special allowance for cleaner break-up.
- Don't over-invest in 80C purely for tax if you're on the new regime. Invest because the instrument fits your goals, not for a deduction you can't claim.
- Continue NPS through 80CCD(2) employer contribution — still deductible under new regime (up to 14% of basic for central government employees, 10% for others).
Compare both regimes for your salary
Our Old vs New Regime comparison page shows side-by-side tax for ₹6L to ₹50L incomes. Or run your own numbers in the income tax calculator.
Frequently asked questions
What is the biggest change in Budget 2025?
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Zero income tax up to ₹12 lakh under the new regime — achieved via a ₹60,000 rebate under Section 87A, plus marginal relief above ₹12L. For salaried, that effectively means zero tax up to ₹12.75L thanks to the ₹75,000 standard deduction.
Are old regime slabs the same in Budget 2025?
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Yes — the old regime is untouched. Slabs remain ₹2.5L / ₹5L / ₹10L, basic exemption ₹2.5L (₹3L for 60-80, ₹5L for 80+), standard deduction ₹50,000. The Budget 2025 changes apply only to the new regime.
Do I need to switch to the new regime?
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Not automatically — the new regime is the default for FY 2025-26 onwards, but you can opt for old regime while filing your ITR if your total deductions exceed roughly 25% of your gross salary. Salaried with no business income can switch every year.
When do Budget 2025 changes apply?
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From FY 2025-26 onwards (assessment year 2026-27 — meaning income earned April 2025 to March 2026). The same slabs continue for FY 2026-27 unless changed in a future Budget.