New vs Old Tax Regime (FY 2025-26)
Compare tax burdens side-by-side to find the optimal tax structure for your salary.
New vs Old Tax Regime (FY 2025-26)
Tax breakdown
New Regime vs Old Regime: The Core Trade-off
The New Tax Regime is the default option since FY 2023-24 — if you don't actively choose otherwise, your employer deducts TDS as per the new regime. It offers lower slab rates and a larger standard deduction (₹75,000) but removes almost every exemption and deduction: no Section 80C, no 80D, no HRA exemption, no home loan interest deduction. The Old Regime keeps higher slab rates but lets you reduce your taxable income first through these deductions. Which one wins depends entirely on how much you can actually claim — this calculator runs both math paths on your real numbers instead of relying on a generic rule of thumb.
Worked Example
A salaried individual earning ₹15,00,000 a year, claiming ₹1,50,000 under Section 80C, ₹25,000 under Section 80D, and ₹50,000 in other deductions:
| Parameter | Old Regime | New Regime |
|---|---|---|
| Standard Deduction | ₹50,000 | ₹75,000 |
| Other Deductions Claimed | ₹2,25,000 | ₹0 (not allowed) |
| Taxable Income | ₹12,25,000 | ₹14,25,000 |
| Tax + 4% Cess | ₹1,87,200 | ₹97,500 |
Despite the Old Regime's deductions, the New Regime still wins here by ₹89,700 — its lower rates and bigger standard deduction outweigh ₹2.25 lakh of claimed deductions. The Old Regime only pulls ahead once your deductions are considerably larger (typically ₹4+ lakh, e.g. a home loan interest claim stacked on top of 80C and HRA).
Tax Payable at Different Salaries (₹2.25L Deductions Claimed)
Assuming ₹1.5L under 80C, ₹25k under 80D, and ₹50k in other deductions — the Old Regime figure includes these; the New Regime cannot claim them:
| Gross Salary | Old Regime Tax | New Regime Tax | Better Choice |
|---|---|---|---|
| ₹8,00,000 | ₹18,200 | ₹0 | New (saves ₹18,200) |
| ₹12,00,000 | ₹1,01,400 | ₹0 | New (saves ₹1,01,400) |
| ₹15,00,000 | ₹1,87,200 | ₹97,500 | New (saves ₹89,700) |
| ₹20,00,000 | ₹3,43,200 | ₹1,92,400 | New (saves ₹1,50,800) |
| ₹25,00,000 | ₹4,99,200 | ₹3,19,800 | New (saves ₹1,79,400) |
With this specific deduction profile, the New Regime wins at every salary level shown. A larger deduction claim (e.g. home loan interest under Section 24b) can flip the result at higher incomes — use the calculator above with your own numbers.
Frequently Asked Questions
Which tax regime is the default in India now?
The New Tax Regime has been the default since FY 2023-24. If you don't explicitly opt for the Old Regime — by informing your employer at the start of the year, or while filing your ITR — your tax is computed, and TDS deducted, under the New Regime automatically.
Can I switch between regimes every year?
Salaried individuals with no business income can switch between the Old and New Regime every single financial year, choosing whichever is more beneficial. Individuals with business or professional income can switch only once in their lifetime back to the Old Regime after opting for the New Regime.
What deductions does the New Regime still allow?
The New Regime keeps very few: the ₹75,000 standard deduction for salaried employees and pensioners, employer's contribution to NPS under Section 80CCD(2), and the transport allowance for differently-abled employees. Section 80C, 80D, HRA, and home loan interest (Section 24b) are not available.
At what deduction amount does the Old Regime start winning?
As a rough guide, once your total eligible deductions (80C + 80D + HRA + home loan interest, etc.) exceed roughly ₹4 to ₹4.5 lakh, the Old Regime typically becomes cheaper — but the exact crossover point shifts with your income level, so it is worth checking both on your actual numbers rather than relying on this rule alone.
Does the Section 87A rebate apply under both regimes?
Yes, but the thresholds differ sharply. Under the New Regime for FY 2025-26, taxable income up to ₹12 lakh is fully rebated (tax becomes zero, up to ₹60,000 rebate). Under the Old Regime, the rebate is capped at ₹12,500 and only applies if taxable income is up to ₹5 lakh.