The new regime is now the default and offers zero tax up to ₹12 lakh of income. But if you claim HRA, home-loan interest and 80C, the old regime can still win. Here is how to decide.
Every salaried employee and individual taxpayer has to choose between the new tax regime (the default) and the old tax regime. The right choice can easily save you ₹20,000–₹1,00,000 a year, so it is worth five minutes of maths.
New regime slabs (FY 2025-26 onwards)
| 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% |
A rebate makes taxable income up to ₹12 lakh effectively tax-free, and salaried taxpayers also get a ₹75,000 standard deduction — so salary up to ₹12.75 lakh pays no tax.
Old regime slabs
| 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% |
The old regime keeps the popular deductions: Section 80C (₹1.5 lakh), 80D health insurance, HRA exemption, home-loan interest up to ₹2 lakh, NPS 80CCD(1B) and more.
A quick rule of thumb
- If your total deductions are small (no home loan, little rent), the new regime almost always wins.
- If you pay high rent in a metro and have a home loan and max out 80C and NPS, run the numbers — the old regime can still come out ahead at higher incomes.
- Salaried employees can switch regimes every year when filing the ITR. Business owners have limited switching options, so choose carefully.
Don't guess — compare
Use our free income tax calculator to compare both regimes in seconds, or ask our tax expert to review your salary structure. Small changes such as restructuring allowances or adding employer NPS can lower your tax under either regime.
Figures are for general information. Surcharge and cess apply as per law; always confirm with the latest Finance Act.
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