Old vs New Tax Regime: Complete Comparison FY 2025-26
Compare income tax savings under old and new regimes. Understand which regime saves you more tax based on your salary, deductions, and financial situation.
Quick Answer: Which Regime Saves More Tax?
Old Regime saves more if your total deductions (80C + HRA + 80D + home loan interest) exceed Rs 3.5-4 lakh/year.
New Regime saves more if deductions are below Rs 3.5 lakh due to Section 87A rebate (zero tax up to Rs 12L income).
Action: Calculate your deductions, use our calculator to compare, and decide by April each year.
Side-by-Side Comparison
| Feature | Old Regime | New Regime |
|---|---|---|
| Best For | High deduction claimers | Simple salaried employees |
| Tax Slabs | 5% → 30% | 0% → 30% (same above ₹24L) |
| Standard Deduction | Not applicable | ₹75,000 (salaried) |
| Section 80C Deduction | ✓ Rs 1.5L limit | ✗ Not allowed |
| HRA Exemption | ✓ Allowed | ✗ Not allowed |
| Home Loan Interest | ✓ Rs 2L limit | ✗ Not allowed |
| Section 80D (Health) | ✓ Allowed | ✗ Not allowed |
| NPS 80CCD(1B) | ✓ Rs 50K extra | ✗ Not allowed |
| Rebate u/s 87A | ✗ Not applicable | ✓ Rs 12L rebate |
| Switching | Allowed annually | Allowed annually |
Interactive Tax Regime Comparison
Click on Old or New Regime above to customize your comparison. Expand categories to focus on specific features (Deductions, Tax Rates, etc.).
Toggle to compare:
| Feature | Old Regime | New Regime |
|---|---|---|
| Suitability | ||
| Best For | High deduction claimers | Simple salaried employees |
| Tax Rates | ||
| Minimum Tax Slab | 5% | 0% (rebate up to Rs 12L) |
| Maximum Tax Slab | 30% | 30% |
| Deductions | ||
| Standard Deduction | Not applicable | ₹75,000 (salaried) |
| Section 80C (₹1.5L limit) | ✓ Allowed | ✗ Not allowed |
| HRA Exemption | ✓ Allowed (up to 50% salary) | ✗ Not allowed |
| Home Loan Interest (₹2L limit) | ✓ Allowed | ✗ Not allowed |
| Section 80D (Health Insurance) | ✓ Allowed | ✗ Not allowed |
| NPS 80CCD(1B) (₹50K extra) | ✓ Allowed | ✗ Not allowed |
| Tax Relief | ||
| Rebate u/s 87A | ✗ Not applicable | ✓ Full tax rebate up to Rs 12L income |
| Flexibility | ||
| Annual Regime Switch | ✓ Allowed (salaried) | ✓ Allowed (salaried) |
| Financial Impact | ||
| Breakeven Deduction Level | Better above ₹3.5-4L deductions | Better below ₹3.5-4L deductions |
Real Example: Rs 15 Lakh Salary
Profile
- • Salary: Rs 15 lakh
- • HRA: Rs 3 lakh
- • 80C (EPF): Rs 1.5 lakh
- • Home loan interest: Rs 2 lakh
- • Tax bracket: 30%
Total Deductions: Rs 6.5 lakh
- • HRA exemption: Rs 2.4 lakh
- • 80C deduction: Rs 1.5 lakh
- • Home loan: Rs 2 lakh
- • Total: Rs 5.9 lakh ≈ Rs 6L
Old Regime
Taxable income: Rs 9 lakh
Tax: Rs 65,900
New Regime
Taxable income: Rs 14.25 lakh
Tax: Rs 97,500
✓ Old regime saves Rs 31,600/year (32% less tax)
How to Decide: Decision Flowchart
Step 1: Calculate Total Deductions
Add: HRA exemption + 80C (Rs 1.5L max) + Home loan interest (Rs 2L max) + 80D insurance + Other deductions
Step 2: Compare in Calculator
Use our Old vs New Regime Calculator to enter your exact salary and deductions
Step 3: Check the Lower Tax Amount
Whichever regime shows lower tax is your answer. But verify break-even if close.
Step 4: Inform Your Employer
Tell HR by April which regime you chose so they set correct TDS
Advertisement
Frequently Asked Questions
Which regime should I choose for FY 2025-26?
Calculate total deductions (80C + HRA + 80D + home loan interest). If total > Rs 3.5L, old regime usually wins. If < Rs 3.5L, new regime wins. For most salaried below Rs 12L salary with few deductions, new regime saves more tax.
Can I switch between regimes every year?
Yes! Salaried employees can switch regimes every financial year at ITR filing. However, you must declare your regime choice to your employer for TDS purposes by April. Self-employed can switch only once in a lifetime.
What is the new regime rebate of Rs 12 lakh?
Section 87A provides a tax rebate of up to full tax liability if taxable income is below Rs 12L under new regime. This means zero tax for income up to Rs 12L. Old regime has no similar rebate.
Is there a break-even income level between regimes?
Yes. The break-even depends on total deductions. For Rs 5L salary: break-even at ~Rs 3.5L deductions. For Rs 10L salary: break-even at ~Rs 4.5L deductions. Use our calculator to find your exact break-even.
Why are HRA and 80C deductions not allowed in new regime?
The new regime eliminates deductions to simplify tax filing and reduce compliance burden. Instead, it offers lower tax rates and rebate u/s 87A. The trade-off is worthwhile only if your deductions are small.
Which regime is better for NPS contributions?
Old regime: Full 80CCD(1B) benefit of Rs 50K extra deduction. New regime: No 80CCD(1B), but employer NPS contribution (80CCD(2)) is deductible even under new regime — making NPS valuable under both.
Related Calculators
Old vs New Regime
NEWCompare tax liability side-by-side under old and new income tax regimes. Find which regime saves you more money.
New Income Tax 2025-26
NEWCalculate income tax under the new regime for FY 2025-26 with updated slabs, 87A rebate, surcharge and cess.
Old Income Tax
Calculate income tax under the old regime with deductions like 80C, 80D, HRA exemption and standard deduction.