Guides / Salary Hike: How Much of It Do You Actually Keep?
Salary Hike: How Much of It Do You Actually Keep?
3 Oct 2026A hike is exciting, but tax can take a big slice.
Example: ₹12 lakh with a 10% hike
Your salary goes from ₹12 lakh to ₹13.2 lakh, an increase of ₹1.2 lakh a year (₹10,000 a month). See the effect with the Salary Hike Calculator.
Under the new tax regime for FY 2026-27 (salaried, no other deductions):
| Salary | Tax |
|---|---|
| ₹12 lakh | ₹0 |
| ₹13.2 lakh | ₹46,800 |
The ₹1.2 lakh hike brings ₹46,800 of extra tax, so you keep about ₹73,200. This happens because the rebate that makes tax nil ends just above ₹12.75 lakh. Check your own numbers in the Income Tax Calculator.
Where regular hikes lead
A 10% hike every year takes ₹12 lakh to about ₹19.3 lakh in 5 years. Compare that with inflation, because a hike below inflation is a real pay cut.
Make the most of a hike
- Review your tax regime. See New vs Old Tax Regime.
- Raise your SIP by part of the hike. See Step-up SIP.
- Avoid raising your lifestyle by the full amount.