Income Tax
New vs Old Tax Regime: Which Should You Choose in FY 2025-26?
A comprehensive guide to help you decide between the new and old tax regime based on your income and deductions.
What Changed in FY 2025-26?
The Union Budget 2024 introduced significant changes to the new tax regime, making it more attractive for many taxpayers:
- Higher Standard Deduction: Increased from Rs 50,000 to Rs 75,000 in the new regime
- Revised Tax Slabs: Lower rates across most income brackets
- Enhanced 87A Rebate: No tax up to Rs 12 lakh income (new regime)
- Higher NPS Contribution: Employer contribution limit increased to 14%
New Regime Tax Slabs (FY 2025-26)
| Income Slab | Tax Rate |
|---|---|
| Up to Rs 4,00,000 | Nil |
| Rs 4,00,001 - 8,00,000 | 5% |
| Rs 8,00,001 - 12,00,000 | 10% |
| Rs 12,00,001 - 16,00,000 | 15% |
| Rs 16,00,001 - 20,00,000 | 20% |
| Rs 20,00,001 - 24,00,000 | 25% |
| Above Rs 24,00,000 | 30% |
Old Regime Tax Slabs (FY 2025-26)
| Income Slab (Below 60 years) | Tax Rate |
|---|---|
| Up to Rs 2,50,000 | Nil |
| Rs 2,50,001 - 5,00,000 | 5% |
| Rs 5,00,001 - 10,00,000 | 20% |
| Above Rs 10,00,000 | 30% |
Key Differences
| Feature | Old Regime | New Regime |
|---|---|---|
| Standard Deduction | Rs 50,000 | Rs 75,000 |
| Section 80C | Available (Rs 1.5L) | Not Available |
| Section 80D | Available | Not Available |
| HRA Exemption | Available | Not Available |
| Home Loan Interest | Rs 2L deduction | Not Available |
| Leave Travel Allowance | Exempt | Taxable |
When to Choose Old Regime?
The old regime may be better if you have significant deductions:
- Home loan interest exceeding Rs 1.5-2 lakh per year
- High HRA exemption (living in metro with substantial rent)
- Maximum Section 80C investments (Rs 1.5 lakh)
- Health insurance premiums (80D) for self and parents
- NPS contributions beyond employer's share
When to Choose New Regime?
The new regime is typically better if:
- Your income is below Rs 12 lakh (zero tax after rebate)
- You have minimal or no deductions to claim
- You live in own house (no HRA benefit)
- You prefer simpler tax filing without documentation
- Your deductions are less than Rs 3-4 lakh per year
Breakeven Analysis
As a rule of thumb, if your total deductions exceed these amounts, old regime may save more tax:
| Annual Income | Breakeven Deduction |
|---|---|
| Rs 10 lakh | ~Rs 2.5 lakh |
| Rs 15 lakh | ~Rs 3.5 lakh |
| Rs 20 lakh | ~Rs 4.25 lakh |
| Rs 25 lakh | ~Rs 4.75 lakh |
Use Our Calculator
Don't guess - use our Income Tax Calculator to compare both regimes with your actual numbers. It will show you exactly how much tax you'll pay under each regime and recommend the better option.
Calculate Your Tax Now
Enter your income and deductions to see which regime saves you more.
Try Income Tax Calculator