New vs Old Tax Regime India: Which Should You
Complete comparison of India new vs old income tax regimes for FY 2025-26 including updated slabs, deductions, and a decision framework.
The Union Budget 2025 made the new tax regime the default for salaried individuals, while keeping the old regime as an opt-in option. With revised slabs and a higher standard deduction, many taxpayers now need to recalculate which regime saves more tax in FY 2025-26.
New Tax Regime Slabs (FY 2025-26)
| Income Slab | Tax Rate |
|---|---|
| Up to ₹4,00,000 | Nil |
| ₹4,00,001 – ₹8,00,000 | 5% |
| ₹8,00,001 – ₹12,00,000 | 10% |
| ₹12,00,001 – ₹16,00,000 | 15% |
| ₹16,00,001 – ₹20,00,000 | 20% |
| ₹20,00,001 – ₹24,00,000 | 25% |
| Above ₹24,00,000 | 30% |
Standard deduction: ₹75,000. Rebate under Section 87A for income up to ₹12,00,000 — effectively zero tax.
Old Tax Regime Slabs (FY 2025-26)
| Income Slab | Tax Rate |
|---|---|
| Up to ₹2,50,000 | Nil |
| ₹2,50,001 – ₹5,00,000 | 5% |
| ₹5,00,001 – ₹10,00,000 | 20% |
| Above ₹10,00,000 | 30% |
Standard deduction: ₹50,000. Key deductions available: Section 80C (₹1.5L), 80D (health insurance), HRA, LTA, home loan interest (24b), NPS (80CCD).
Break-Even Analysis
The new regime is better for most people with income up to ₹12 lakhs due to the rebate. For higher incomes, the old regime can win if you claim significant deductions:
- At ₹15L income: Old regime wins if total deductions exceed ~₹3.75L
- At ₹20L income: Old regime wins if total deductions exceed ~₹4.25L
- At ₹30L income: Old regime wins if total deductions exceed ~₹5.5L
Which Should You Choose?
Choose New Regime if:
- Your income is below ₹12 lakhs (zero tax due to rebate)
- You do not have a home loan, large HRA, or heavy 80C investments
- You prefer simplicity over tax planning
Choose Old Regime if:
- You claim HRA + home loan interest + full 80C (₹1.5L) + 80D
- Your employer contributes to NPS (additional 80CCD(2) deduction)
- Your total deductions exceed the break-even threshold for your income slab
Use our Income Tax Calculator to compare both regimes instantly with your exact salary and deductions.