New Tax Regime Calculation Explained: How Much Income Tax Can You Save On Salary Between Rs 8 Lakh To Rs 25 Lakh?

In the Budget 2025, Finance Minister Nirmala Sitharaman introduced new income tax slabs under the new tax regime on April 1, 2025, for the Financial Year (FY) 2025-26. The new scheme provides substantial savings, particularly to middle-class taxpayers.

There is no tax on income of Rs 12 lakh or less, and salaried taxpayers can get tax exemption of up to Rs 12.75 lakh because of a Rs 75,000 standard deduction. The rebate under Section 87A has also been increased to Rs 60,000, increasing savings.

Tax Savings Breakdown

Here's how much you can save annually and monthly on various incomes under the new tax regime, based on the Income Tax Department's guidelines calculations.

Rs 8 Lakh Income: 

The taxable income is reduced to Rs 7.25 lakh due to the normal deduction. With the rebate, you pay nothing in tax, saving Rs 42,500 per year (Rs 3,542 a month) against the old regime's possible tax.

Also Read: More Money In Your Pocket & Five Options To Invest It Wisely | Why RBI's Rate Cut Is Good News

Rs 12.80 Lakh Income: 

Taxable income after deduction is Rs 12.05 lakh. The rebate ensures tax remains nil, saving Rs 1,14,400 annually (Rs 9,533 monthly).
Rs 17.95 Lakh Income: 

Taxable income is Rs 17.20 lakh. Tax payable is approximately Rs 1,65,000, but savings are Rs 1,45,600 annually (Rs 12,133 monthly) over the previous regime due to reduced rates.
 

Also Read: New Tax Regime Tax Slabs From April 1: Zero Tax Up To Rs 12 Lakh Income - Salary Vs Tax Calculation

Rs 25.10 Lakh Income: 

Taxable income is Rs 24.35 lakh, and tax is approximately Rs 4,50,000. Savings are Rs 1,87,200 per annum (Rs 15,600 per month) in comparison to earlier rates.

The government also raised the TDS limit on rent to Rs 6 lakh annually, easing compliance. You can also use the Income Tax Department’s calculator at the official website (incometax.gov.in) for precise planning.