Old vs New Tax Regime (FY 2025-26): Which One Saves You More?
8 min read · Published September 2026 · Updated for Union Budget Slabs
⚡ Quick Answer: The Breakeven Threshold
For salaried individuals earning up to ₹7.75 Lakhs, the New Tax Regime is completely tax-free (thanks to the ₹75,000 standard deduction + Section 87A rebate). For higher earners, the Old Regime only saves money if your eligible deductions (80C, 80D, HRA, home loan interest) exceed ₹3.75 Lakhs to ₹4.25 Lakhs. Otherwise, the New Regime delivers higher take-home pay with zero investment paperwork.
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Use our free online interactive calculator to compare Old vs New regimes with your exact salary, HRA, and 80C investments.
Launch Income Tax Calculator →Tax Slabs Comparison for FY 2025-26
Under the revised New Tax Regime, tax slabs have been adjusted to offer lower marginal rates, while the standard deduction for salaried employees stands enhanced at ₹75,000:
| Income Slab | New Tax Regime Rate | Old Tax Regime Rate |
|---|---|---|
| Up to ₹3,00,000 | Nil | Nil (up to ₹2.5L) |
| ₹3,00,001 – ₹7,00,000 | 5% | 5% (₹2.5L to ₹5L) |
| ₹7,00,001 – ₹10,00,000 | 10% | 20% (₹5L to ₹10L) |
| ₹10,00,001 – ₹12,00,000 | 15% | 30% (above ₹10L) |
| ₹12,00,001 – ₹15,00,000 | 20% | 30% |
| Above ₹15,00,000 | 30% | 30% |
Key Deductions Allowed in Each Regime
- New Tax Regime: Standard Deduction (₹75,000 for salaried employees), employer's contribution to NPS under Section 80CCD(2) up to 14%. No 80C, 80D, or HRA exemptions.
- Old Tax Regime: Standard deduction (₹50,000), Section 80C (PPF, ELSS, EPF up to ₹1.5 Lakh), Section 80D (Health Insurance up to ₹75,000), House Rent Allowance (HRA), and Home Loan Interest under Section 24(b) up to ₹2 Lakhs.
Which Regime Should You Choose?
- Choose the New Regime if: You are a young professional, have an annual income under ₹12–15 Lakhs, do not pay substantial house rent, or do not wish to lock up liquidity into 5-year tax-saver fixed deposits or ELSS funds.
- Choose the Old Regime if: You are servicing a home loan, claim large HRA in tier-1 metro cities (Mumbai, Bengaluru, Delhi NCR), max out Section 80C (₹1.5L), and pay significant health insurance premiums.
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