Budget 2025: Earning above ₹12 lakh? Here’s how your tax could spike—or stay in check
Imagine getting a salary bump, only to find that your tax bill eats up most—if not all—of your raise. While the new tax regime in Budget 2025 promises no tax on incomes up to ₹12 lakh, it doesn’t necessarily mean that earning a little more is always beneficial. Thankfully, marginal relief has your back, ensuring that small increases in income don’t result in a huge spike in tax outgo.
Here’s what you need to know to make sure your paycheck isn't sabotaged by the taxman.
According to the Union Budget for 2025-26, presented by finance minister Nirmala Sitharaman, starting from next financial year, there will be no tax under the new regime on incomes up to ₹12 lakh. For salaried individuals, this limit is ₹12.75 lakh after accounting for the standard deduction.
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However, ₹12 lakh is not the absolute tax exemption limit. According to the tax slab rates, the tax liability at ₹12 lakh income would be ₹60,000. But, thanks to the rebate, you won’t actually have to pay that amount. Here’s the twist: What if your income slightly exceeds the rebate limit, say by ₹5,000? Does that mean you’ll have to pay the full ₹60,000 tax? Fortunately, the answer is no. Marginal relief steps in.
Marginal relief ensures that the maximum tax outgo on income that marginally exceeds ₹12 lakh is capped at the increase in income. For instance, if your income reaches ₹12.3 lakh, your tax liability as per the slab rates would work out to ₹67,080 (including a 4% cess). But with marginal relief, your actual tax outgo will be ₹30,000—equal to the increase in your income.
Read this | Budget 2025 | A ₹1 trillion largesse for India's middle class
This relief is available until your income reaches
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