30% in India, 37% in US, 45% in UK: How India’s 2025 tax rates stack up globally
India’s new top tax rate of 30% under the revised regime remains lower than the US’s 37% and the UK’s 45%, placing it competitively among global tax systems. While higher earners in Europe and the US face steeper rates, India’s updated slabs offer relief for middle-income earners.
- Jul 9, 2025,
- Updated Jul 9, 2025 5:41 PM IST
As individuals and businesses increasingly operate across borders, understanding how income tax systems compare around the world has become crucial for financial planning, relocation decisions, and global expansion strategies. Whether you’re an NRI aiming to minimise your tax liability, an Indian startup exploring international markets, or a high-net-worth individual evaluating investment returns, knowing where India stands in the global tax landscape offers a valuable perspective.
Online tax platform Efiletax compared the tax rates across major economies in 2025, which showed stark differences in how countries tax personal income.
India’s new income tax regime for FY 2025–26 continues to feature a progressive, slab-based system, capping the top tax rate at 30% (excluding surcharge and cess). However, the government has introduced revised tax slabs effective from April 1, 2025, offering potential relief for middle-income earners.
The revised tax slabs under the new regime applicable from 1st April 2025 are as follows:
Income Tax Slabs Income Tax Rates Up to Rs. 4 lakh NIL Rs. 4 lakh - Rs. 8 lakh 5% Rs. 8 lakh - Rs. 12 lakh 10% Rs. 12 lakh - Rs. 16 lakh 15% Rs. 16 lakh - Rs. 20 lakh 20% Rs. 20 lakh - Rs. 24 lakh 25% Above Rs. 24 lakh 30%
The rebate has been increased to Rs. 60,000 from Rs. 25,000 for FY 2025-26. With this revised tax structure, individuals earning up to Rs. 12 lakh will have no tax liability due to the higher rebate of Rs. 60,000. Additionally, salaried individuals benefit from a Rs. 75,000 standard deduction, effectively making income up to Rs. 12.75 lakh tax-free under the new regime.
However, taxpayers choosing the new regime have to forgo popular deductions under sections like 80C and 80D, though they may still opt for the older regime if they wish to claim deductions.
“The new tax regime simplifies compliance but may not benefit everyone equally,” efiletax noted in its blog. “High earners who extensively use deductions might still find the old regime more tax-efficient.”
India’s top rate sits at the lower end compared to several developed nations. For instance, Germany, the UK, Japan, and China all impose maximum rates of 45%, while Australia reaches the same threshold. In contrast, the United States levies a federal top rate of 37%, not including state taxes, while Canada has a combined federal and provincial top rate of around 33% plus local levies.
Singapore offers a relatively moderate top rate of 24%, while New Zealand caps at 39%. Meanwhile, the United Arab Emirates stands out as a tax haven for individuals, imposing zero personal income tax, though corporate tax and indirect levies like VAT may still apply.
For remote workers and freelancers, these differences hold practical significance. “Tax residency rules vary widely,” it noted further. “People working across borders must check local laws and Double Taxation Avoidance Agreements (DTAA) to avoid paying tax twice on the same income.”
Interestingly, some countries like Qatar, Bahamas, Bermuda, and Kuwait also impose no personal income tax, attracting high-net-worth individuals and expatriates. Yet, these nations often offset lost revenue through other taxes such as VAT, customs duties, or specific residency fees.
| India | Slab-based (Progressive) | 30% (excluding surcharge) | Rs 3 lakh (new regime) |
| US | Progressive | 37% | $14,600 (Single) |
| UK | Progressive | 45% | £12,570 |
| UAE | Territorial (no PIT) | 0% | N/A |
| Singapore | Progressive | 24% | SGD 20,000 |
| Australia | Progressive | 45% | AUD 18,200 |
| Germany | Progressive | 45% | €11,604 |
| Japan | Progressive | 45% (plus local tax) | ¥480,000 |
| Canada | Progressive | 33% (Fed) + Provincial Taxes | CAD 15,705 |
| New Zealand | Progressive | 39% | NZD 14,000 |
| China | Progressive | 45% | RMB 60,000 |
Source: Efiletax
Ultimately, India’s tax structure remains competitive for many middle-income earners, even as global tax trends lean toward higher rates in developed economies. As economies become more interconnected, individuals and businesses must stay informed about international tax regimes to make smarter financial and strategic decisions in 2025 and beyond.
As individuals and businesses increasingly operate across borders, understanding how income tax systems compare around the world has become crucial for financial planning, relocation decisions, and global expansion strategies. Whether you’re an NRI aiming to minimise your tax liability, an Indian startup exploring international markets, or a high-net-worth individual evaluating investment returns, knowing where India stands in the global tax landscape offers a valuable perspective.
Online tax platform Efiletax compared the tax rates across major economies in 2025, which showed stark differences in how countries tax personal income.
India’s new income tax regime for FY 2025–26 continues to feature a progressive, slab-based system, capping the top tax rate at 30% (excluding surcharge and cess). However, the government has introduced revised tax slabs effective from April 1, 2025, offering potential relief for middle-income earners.
The revised tax slabs under the new regime applicable from 1st April 2025 are as follows:
Income Tax Slabs Income Tax Rates Up to Rs. 4 lakh NIL Rs. 4 lakh - Rs. 8 lakh 5% Rs. 8 lakh - Rs. 12 lakh 10% Rs. 12 lakh - Rs. 16 lakh 15% Rs. 16 lakh - Rs. 20 lakh 20% Rs. 20 lakh - Rs. 24 lakh 25% Above Rs. 24 lakh 30%
The rebate has been increased to Rs. 60,000 from Rs. 25,000 for FY 2025-26. With this revised tax structure, individuals earning up to Rs. 12 lakh will have no tax liability due to the higher rebate of Rs. 60,000. Additionally, salaried individuals benefit from a Rs. 75,000 standard deduction, effectively making income up to Rs. 12.75 lakh tax-free under the new regime.
However, taxpayers choosing the new regime have to forgo popular deductions under sections like 80C and 80D, though they may still opt for the older regime if they wish to claim deductions.
“The new tax regime simplifies compliance but may not benefit everyone equally,” efiletax noted in its blog. “High earners who extensively use deductions might still find the old regime more tax-efficient.”
India’s top rate sits at the lower end compared to several developed nations. For instance, Germany, the UK, Japan, and China all impose maximum rates of 45%, while Australia reaches the same threshold. In contrast, the United States levies a federal top rate of 37%, not including state taxes, while Canada has a combined federal and provincial top rate of around 33% plus local levies.
Singapore offers a relatively moderate top rate of 24%, while New Zealand caps at 39%. Meanwhile, the United Arab Emirates stands out as a tax haven for individuals, imposing zero personal income tax, though corporate tax and indirect levies like VAT may still apply.
For remote workers and freelancers, these differences hold practical significance. “Tax residency rules vary widely,” it noted further. “People working across borders must check local laws and Double Taxation Avoidance Agreements (DTAA) to avoid paying tax twice on the same income.”
Interestingly, some countries like Qatar, Bahamas, Bermuda, and Kuwait also impose no personal income tax, attracting high-net-worth individuals and expatriates. Yet, these nations often offset lost revenue through other taxes such as VAT, customs duties, or specific residency fees.
| India | Slab-based (Progressive) | 30% (excluding surcharge) | Rs 3 lakh (new regime) |
| US | Progressive | 37% | $14,600 (Single) |
| UK | Progressive | 45% | £12,570 |
| UAE | Territorial (no PIT) | 0% | N/A |
| Singapore | Progressive | 24% | SGD 20,000 |
| Australia | Progressive | 45% | AUD 18,200 |
| Germany | Progressive | 45% | €11,604 |
| Japan | Progressive | 45% (plus local tax) | ¥480,000 |
| Canada | Progressive | 33% (Fed) + Provincial Taxes | CAD 15,705 |
| New Zealand | Progressive | 39% | NZD 14,000 |
| China | Progressive | 45% | RMB 60,000 |
Source: Efiletax
Ultimately, India’s tax structure remains competitive for many middle-income earners, even as global tax trends lean toward higher rates in developed economies. As economies become more interconnected, individuals and businesses must stay informed about international tax regimes to make smarter financial and strategic decisions in 2025 and beyond.