Old vs New Tax Regime: Which Is Better for You?
The new regime has lower rates but almost no deductions; the old regime rewards deductions. Here's how to decide for FY 2025-26.
for fy 2025-26 (ay 2026-27) the new regime is the default. it has wider, lower slabs but removes most deductions and exemptions. the old regime keeps deductions like 80c, 80d, hra and home-loan interest, but with higher rates. which wins depends entirely on how much you actually claim.
New Regime Slabs (fy 2025-26)
| income | rate |
|---|---|
| up to ₹4,00,000 | nil |
| ₹4–8 lakh | 5% |
| ₹8–12 lakh | 10% |
| ₹12–16 lakh | 15% |
| ₹16–20 lakh | 20% |
| ₹20–24 lakh | 25% |
| above ₹24 lakh | 30% |
The ₹12 Lakh Sweet Spot
under the new regime, the section 87a rebate makes tax nil up to ₹12 lakh taxable income — and ₹12.75 lakh for salaried taxpayers after the ₹75,000 standard deduction — with marginal relief just above that.
When the Old Regime Still Wins
if you claim large deductions — full 80c (₹1.5 lakh), 80d health insurance, hra, and home-loan interest — the old regime can still produce a lower tax. the more you legitimately claim, the more attractive it becomes.
How to Decide
- estimate your total deductions for the year;
- compare tax under both regimes (use our calculator);
- salaried taxpayers can switch each year; those with business income use form 10-iea to opt out of the new regime.
The Easy Way
our old-vs-new regime calculator gives you a quick comparison. for an exact answer on your full income — including capital gains and special-rate items — request a quote.