Union Budget 2025-26: Major Tax Relief for Middle Class, No Income Tax up to ₹12 Lakh

New Delhi: The Union Budget 2025-26 has introduced significant tax relief for the middle class, reinforcing the government’s philosophy of “trust first, scrutinize later.” Presenting the budget in Parliament, Union Finance Minister Nirmala Sitharaman announced a major overhaul in tax slabs and rates, ensuring lower tax burdens and higher disposable income for millions of taxpayers.

The most significant announcement was the exemption of income up to ₹12 lakh from taxation under the new regime. For salaried taxpayers, this limit is ₹12.75 lakh, factoring in a ₹75,000 standard deduction. The Finance Minister emphasized that the revised structure would reduce taxes for the middle class, boost household consumption, and encourage savings and investment.

Under the new tax regime, incomes up to ₹4 lakh will be tax-free. A 5% tax will be levied on income between ₹4 lakh and ₹8 lakh, while those earning between ₹8 lakh and ₹12 lakh will pay 10%. The next brackets include a 15% tax rate for incomes up to ₹16 lakh, 20% for up to ₹20 lakh, and 25% for those earning between ₹20 lakh and ₹24 lakh. The highest slab, applying to incomes above ₹24 lakh, remains at 30%.

The new tax structure, coupled with rebates, ensures zero tax liability for many taxpayers. The Finance Minister described these changes as a step towards “Viksit Bharat” and emphasized the government’s commitment to simplifying tax laws, reducing litigation, and ensuring tax certainty.

Quoting Tamil philosopher Thiruvalluvar, Sitharaman remarked, “Just as living beings expect rain, citizens expect good governance.” She asserted that these tax reforms reflect the government’s responsiveness to public aspirations under the leadership of Prime Minister Narendra Modi.