Which is better — New or Old tax regime for FY 2025-26?

The New Regime is better for most salaried employees with income below ₹7 lakh (zero tax due to 87A rebate) or those with few deductions. The Old Regime is beneficial if you have high deductions: ₹1.5L in 80C + ₹50K NPS + ₹2L home loan interest. As a rule of thumb, if total deductions exceed ₹3.75 lakh, the Old Regime saves more tax.

What is the standard deduction in the New Regime for FY 2025-26?

The standard deduction under the New Tax Regime was increased from ₹50,000 to ₹75,000 in the Union Budget 2024. This means salaried employees get ₹75,000 automatically deducted from their gross salary before tax is calculated under the new regime.

What is the income tax slab for FY 2025-26 under New Regime?

New Regime tax slabs FY 2025-26: ₹0–3L: Nil; ₹3L–7L: 5%; ₹7L–10L: 10%; ₹10L–12L: 15%; ₹12L–15L: 20%; Above ₹15L: 30%. Income up to ₹7L is tax-free under new regime due to Section 87A rebate. Plus 4% Health & Education cess on tax.

What is the 87A tax rebate for FY 2025-26?

Under Section 87A: New Regime — full tax rebate if taxable income ≤ ₹7 lakh (rebate up to ₹25,000). Old Regime — full tax rebate if taxable income ≤ ₹5 lakh (rebate up to ₹12,500). This means zero income tax for most lower and middle-income salaried earners.

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Income Tax Calculator India

Compare New vs Old tax regime, calculate your exact tax liability & find out which regime saves you more money.

Annual Gross Income (CTC / Total Income)

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₹1L₹1 Cr

Deductions (for Old Regime only)

Section 80C Max ₹1.5L

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Section 80D Max ₹25K

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Home Loan Interest Max ₹2L

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NPS 80CCD(1B) Max ₹50K

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Income Tax Slabs

🆕 New Regime

Income Slab	Rate
Up to ₹3,00,000	Nil
₹3L – ₹7L	5%
₹7L – ₹10L	10%
₹10L – ₹12L	15%
₹12L – ₹15L	20%
Above ₹15L	30%

Standard deduction: ₹75,000 | 87A rebate up to ₹7L taxable

📋 Old Regime

Income Slab	Rate
Up to ₹2,50,000	Nil
₹2.5L – ₹5L	5%
₹5L – ₹10L	20%
Above ₹10L	30%

Standard deduction: ₹50,000 | 87A rebate up to ₹5L taxable | HRA, LTA, 80C, 80D allowed

ℹ️All tax amounts above are subject to 4% Health & Education Cess on the calculated tax.

When is Old Regime Better?

The Old Regime saves more tax if your total deductions exceed the break-even point. Here's a quick reference:

Annual Income	Break-even Deduction	Typical Recommendation
Up to ₹7 Lakh	Any amount	New Regime (zero tax)
₹7L – ₹10L	~₹2.5 Lakh	New if deductions < ₹2.5L
₹10L – ₹15L	~₹3.25 Lakh	Compare both
Above ₹15L	~₹3.75 Lakh	Old if deductions > ₹3.75L

Frequently Asked Questions

The New Regime is typically better if your income is below ₹7L (zero tax) or if you have very few deductions. The Old Regime wins when total deductions (80C + 80D + HRA + home loan interest + NPS) exceed approximately ₹3.75 lakh for incomes above ₹15L. Use our calculator above to see which regime gives you a lower tax for your specific situation.

Under the New Regime for FY 2025-26: ₹0–3L (0%), ₹3L–7L (5%), ₹7L–10L (10%), ₹10L–12L (15%), ₹12L–15L (20%), above ₹15L (30%). The standard deduction is ₹75,000. Income up to ₹7L is effectively tax-free due to the Section 87A rebate. Add 4% cess on the final tax amount.

The New Regime allows very few deductions: Standard Deduction (₹75,000), Employer's NPS contribution (80CCD(2)), interest on home loan for let-out property (not self-occupied), and a few others. The New Regime does NOT allow 80C, 80D, HRA exemption, LTA, or home loan interest on self-occupied property.

Salaried employees (no business income) can switch between Old and New regime every financial year. Simply inform your employer at the start of the year for TDS purposes, or choose at ITR filing time. If you have business income, you can switch to old regime only once. After that you're locked in unless you stop the business.

Yes. Surcharge applies on high incomes: 10% surcharge for income ₹50L–₹1Cr; 15% for ₹1Cr–₹2Cr; 25% for ₹2Cr–₹5Cr; 37% for above ₹5Cr (only under Old Regime — New Regime caps surcharge at 25%). This calculator covers typical salaried income without surcharge. Marginal relief applies near slab boundaries.