What Budget 2026 means for your salary: Is there a change in income tax slabs? All you need to know

Indian Finance Minister Nirmala Sitharaman on Saturday (Feb 1), in the Union Budget 2025–26, announced no change in the income tax slabs for salaried individuals. This means that “nil tax” threshold to ₹12 lakh under the new tax regime stays in place.

Income Tax and the Middle Class

Calling the middle class one of the core drivers of India’s growth story, Sitharaman said in her Budget speech: "Democracy, Demography and Demand are the key support pillars in our journey towards Viksit Bharat. The middle class provides strength for India’s growth. This Government, under the leadership of Prime Minister Modi, has always believed in the admirable energy and ability of the middle class in nation-building."

She added that the Narendra Modi government, in recognition of this, has sought to "periodically reduce their tax burden". She pointed out that the NDA government has steadily expanded tax relief for this group, and that the “nil tax” slab has increased over the years.

"Right after 2014, the ‘Nil tax’ slab was raised to 2.5 lakh, which was further raised to 5 lakh in 2019 and to 7 lakh in 2023. This is reflective of our Government’s trust on the middle-class taxpayers. I am now happy to announce that there will be no income tax payable upto income of 12 lakh (i.e. average income of 1 lakh per month, other than special rate income such as capital gains) under the new regime. This limit will be 12.75 lakh for salaried taxpayers, due to the standard deduction of 75,000."

New income tax slabs

Sitharaman announced the following tax slabs, saying the changes would benefit all taxpayers. "Slabs and rates are being changed across the board to benefit all taxpayers. The new structure will substantially reduce the taxes of the middle class and leave more money in their hands, boosting household consumption, savings and investment."

Revised tax rate structure as follows: