The biggest question every salaried Indian faces in 2025-26: New Regime or Old Regime? Budget 2025 made the New Regime more attractive with a higher 87A rebate (zero tax up to ₹12L) and higher standard deduction (₹75,000). But Old Regime is still better for many people with high deductions.
| Income Slab | New Regime Rate | Old Regime Rate |
|---|---|---|
| Up to ₹2,50,000 | Nil | Nil |
| ₹2.5L – ₹4L | Nil (new slab) | 5% |
| ₹4L – ₹5L | 5% | 5% |
| ₹5L – ₹8L | 5–10% | 20% |
| ₹8L – ₹10L | 10% | 20% |
| ₹10L – ₹12L | 10–15% | 30% |
| ₹12L – ₹16L | 15% | 30% |
| ₹16L – ₹20L | 20% | 30% |
| ₹20L – ₹24L | 25% | 30% |
| Above ₹24L | 30% | 30% |
| New Regime | Old Regime | |
|---|---|---|
| Gross income | ₹12,00,000 | ₹12,00,000 |
| Standard deduction | ₹75,000 | ₹50,000 |
| Other deductions (80C etc) | Not applicable | ₹1,50,000 |
| Taxable income | ₹11,25,000 | ₹10,00,000 |
| Income tax | ₹60,000 | ₹1,12,500 |
| 87A rebate | ₹60,000 | Nil |
| Net tax payable | ₹0 | ₹1,17,000 (with cess) |
Verdict: New Regime saves ₹1,17,000 per year at ₹12L income.
| New Regime | Old Regime | |
|---|---|---|
| Gross income | ₹20,00,000 | ₹20,00,000 |
| Standard deduction | ₹75,000 | ₹50,000 |
| 80C investments | — | ₹1,50,000 |
| HRA exemption | — | ₹1,80,000 |
| 80D health insurance | — | ₹25,000 |
| Taxable income | ₹19,25,000 | ₹16,45,000 (approx) |
| Net tax (with cess) | ₹3,29,720 | ₹3,09,400 |
Verdict: Old Regime saves ₹20,320/year at ₹20L income with full deductions.
The Old Regime is better only if your deductions exceed this threshold:
| Annual Income | Break-even deduction needed | Recommended regime |
|---|---|---|
| ₹8 – ₹12 Lakh | Not applicable | New Regime (zero tax) |
| ₹12 – ₹15 Lakh | ₹3.75 Lakh+ | Compare both |
| ₹15 – ₹20 Lakh | ₹4.00 Lakh+ | Old if maxed deductions |
| ₹20 – ₹30 Lakh | ₹4.50 Lakh+ | Old if HRA + 80C + 80D maxed |
| Above ₹30 Lakh | ₹5.00 Lakh+ | New Regime usually better |
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