Tax Relief for Middle Class: Rebate, Deduction, or Slab Tweak?

• The 2025 Budget reforms (effective FY 2025-26) introduced three key tax relief measures: rebate, standard deduction, and slab tweaks.
• Rebate under Section 87A, enhanced to Rs 12 lakh, offers the most significant immediate relief for lower-middle-class earners (up to Rs 12-13 lakh), potentially leading to zero tax liability.
• Standard Deduction, raised to Rs 75,000, universally benefits all salaried individuals and pensioners by directly reducing taxable income without investment proof.
• Tax Slab Tweak, where the 30% rate now applies above Rs 24 lakh, primarily aids the upper-middle class (above Rs 15-20 lakh) by reducing their overall tax burden.
• Future expectations for 2026 include further increasing the standard deduction to Rs 1 lakh and widening tax slabs to combat inflation and provide more disposable income.

Why It Matters: Rebate helps lower-middle class, standard deduction benefits all salaried, and slab tweaks aid upper-middle class.