Tax Regime Comparison FY 2025-26 (Income Tax Act 2025)

Old vs New Tax Regime

Complete comparison to help you choose the tax regime that saves you the most money. Compare rates, deductions, and see real examples.

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Quick Decision Guide

Choose New Regime If:

  • You don't have many deductions to claim
  • You want simpler tax filing
  • Your income is below ₹10 lakh
  • You don't pay HRA or home loan EMI

Choose Old Regime If:

  • You max out 80C deductions (₹1.5L)
  • You claim HRA exemption
  • You have home loan interest deduction
  • Your income is above ₹15 lakh with deductions

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Tax Slab Comparison

New Tax Regime
FY 2025-26 / Tax Year 2026-27 (Default under Income Tax Act 2025)
Up to ₹3 lakh
Nil
0%
₹3 - ₹7 lakh
Up to ₹20,000
5%
₹7 - ₹10 lakh
₹20,000 - ₹50,000
10%
₹10 - ₹12 lakh
₹50,000 - ₹80,000
15%
₹12 - ₹15 lakh
₹80,000 - ₹1,40,000
20%
Above ₹15 lakh
₹1,40,000+
30%
Effective Tax-Free: ₹12.75 lakh (salaried)
₹4L basic exemption + ₹75K standard deduction = ₹12L taxable, fully covered by ₹60K rebate
Old Tax Regime
FY 2025-26 / Tax Year 2026-27 (Opt-in)
Up to ₹2.5 lakh
Nil
0%
₹2.5 - ₹5 lakh
Up to ₹12,500
5%
₹5 - ₹10 lakh
₹12,500 - ₹1,12,500
20%
Above ₹10 lakh
₹1,12,500+
30%
With Deductions: Up to ₹5.5L tax-free
₹2.5L basic + ₹50K std + ₹1.5L 80C + ₹50K NPS + ₹25K 80D + more deductions available

Features & Deductions

FeatureNew RegimeOld Regime
Lower tax rates
Higher basic exemption (₹3L)
Standard deduction (₹75K)
Simplified calculation
Section 80C deductions
HRA exemption
Section 80D (health insurance)
Home loan interest deduction

Real-World Examples

Salaried Employee (No Investments)
Annual Income: ₹10 lakh
New Regime Tax:₹37,500
Old Regime Tax:₹62,500
Winner:
New Regime
Annual Savings:₹25,000

Without deductions, new regime is clearly better

Investor with 80C + HRA
Annual Income: ₹12 lakh
New Regime Tax:₹67,500
Old Regime Tax:₹45,000
Winner:
Old Regime
Annual Savings:₹22,500

With full deductions, old regime saves more

Home Loan + Investments
Annual Income: ₹15 lakh
New Regime Tax:₹1,27,500
Old Regime Tax:₹87,500
Winner:
Old Regime
Annual Savings:₹40,000

Home loan interest + 80C makes old regime winner

Important Points to Remember
  • One-time choice for salaried: You can switch between regimes each year while filing ITR
  • Business income: Once you opt for new regime, you cannot switch back to old regime
  • Calculate both: Always calculate tax under both regimes before deciding
  • Employer deduction: Inform your employer which regime you choose for TDS calculation
  • Future planning: Consider your investment and home loan plans while choosing

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