New Income Tax Regime 2025: Who Benefits from Lower Tax Rates and Slabs?

The Union Budget 2025 has introduced key reforms in the new income tax regime, making it the preferred choice for a majority of taxpayers in the upcoming financial year.

With lower tax rates and wider slabs, Finance Minister Nirmala Sitharaman has provided significant tax relief across different income groups.

Taxpayers have received a welcome respite as income tax rates have been reduced, and tax slabs have been further streamlined. The new regime aims to provide financial relief and encourage taxpayers to opt for a simpler, deduction-free taxation structure.

Key Changes in the New Income Tax Regime

• Basic exemption limit increased to Rs 4 lakh

• Individuals earning up to Rs 12 lakh will not pay any tax under Section 87A rebate

• Salaried individuals with an annual income of Rs 12.75 lakh will have zero tax liability, considering the standard deduction of Rs 75,000

• High-income earners (above Rs 24 lakh per annum) can save up to Rs 1.1 lakh annually under the revised tax slabs

Who Will Benefit the most under New Income Tax Regime?

The latest reforms aim to ease the tax burden on middle-class taxpayers by offering a simplified structure with wider tax slabs.

Middle-Class Relief: A Major Win

Many taxpayers, who earlier relied on deductions and exemptions to lower their tax liability, will now find their tax outgo reduced even without additional planning.

Middle-Class Salaried Individual

Relief for Rs 12-24 Lakh Income Bracket

The new regime particularly benefits those earning between Rs 12 lakh and Rs 24 lakh, making it a clear winner for individuals in this segment.

Higher Income Groups: New Regime Benefits

The tax relief extends to high-income earners as well, particularly those earning between Rs 24 lakh and Rs 50 lakh.

Old Regime vs New Regime: Which One Works Best?

While the new tax regime offers substantial savings, some individuals with significant deductions may find the old tax regime more beneficial.

Making the Right Choice: Expert Insights

According to tax experts, individuals with minimal deductions will benefit the most from the new tax regime, whereas those with high exemptions should carefully assess their financial situation before making the switch.

Conclusion

The new income tax regime introduced in Budget 2025 aims to simplify taxation and reduce the burden on middle-class and high-income taxpayers.

With increased exemption limits, lower tax rates, and rationalized slabs, many taxpayers will find their tax liability significantly reduced. However, those with substantial deductions and exemptions should carefully evaluate their options before making the switch.

Tax experts recommend assessing individual financial situations to determine whether the new regime offers better savings compared to the old system.

As taxpayers gear up for the new financial year, the right tax regime choice will depend on income levels, investment patterns, and financial goals.