Which tax regime is better for salaried employees in FY 2025-26?

For most salaried employees in FY 2025-26, the new tax regime is better if their total deductions (80C, 80D, HRA, NPS, home loan interest, standard deduction) are below approximately ₹3.75 lakh for incomes around ₹15 lakh. Use our calculator above to check your specific situation.

What is the standard deduction in the new tax regime for 2025-26?

The standard deduction under the new tax regime for FY 2025-26 is ₹75,000 for salaried employees. Under the old tax regime, it remains ₹50,000.

Can I switch between old and new tax regime every year?

Salaried individuals can switch between old and new tax regime every financial year. However, if you have business or professional income, you can switch to the old regime only once per lifetime (and back to new regime once after that).

Is Section 80C deduction available under the new tax regime?

No, Section 80C deductions (PPF, ELSS, LIC premium, EPF, NSC, etc.) are not available under the new tax regime. The new regime offers lower tax rates but does not allow most deductions and exemptions.

What is the income tax rebate under the new regime in FY 2025-26?

Under the new tax regime for FY 2025-26, individuals with taxable income up to ₹12 lakh get a rebate under Section 87A, making their effective tax liability nil. Salaried individuals earning up to ₹12.75 lakh (including ₹75,000 standard deduction) also pay zero tax.

FY 2025-26 / Tax Year 2026-27

Side-by-Side · FY 2025-26

Old vs New Tax Regime — which saves you more?

Enter your income and deductions below to instantly see your tax liability under both regimes, powered by the official FY 2025-26 tax slabs.

Quick Tax Regime Calculator

Income Details

Employment Type

Annual Gross Income

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Old Regime Deductions

Enter your actual deductions to get an accurate comparison

Section 80C(max ₹1,50,000)

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PPF, ELSS, EPF, LIC, NSC…

Section 80D (Health Insurance)(max ₹25,000)

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Self & family

HRA Exemption

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Exempt portion of HRA

NPS — 80CCD(1B)(max ₹50,000)

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Additional NPS beyond 80C

Home Loan Interest (Sec 24b)(max ₹2,00,000)

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Self-occupied property

Enter your gross income to see the comparison

Tax Slab Comparison: FY 2025-26

New Tax Regime — FY 2025-26

Income Range	Tax Rate
Up to ₹4L	Nil
₹4.0L – ₹8L	5%
₹8.0L – ₹12L	10%
₹12.0L – ₹16L	15%
₹16.0L – ₹20L	20%
₹20.0L – ₹24L	25%
Above ₹24L	30%

Old Tax Regime — FY 2025-26

Income Range	Tax Rate
Up to ₹2.5L	Nil
₹2.5L – ₹5L	5%
₹5.0L – ₹10L	20%
Above ₹10L	30%

4% Health & Education Cess is added on top of income tax + surcharge in both regimes. Surcharge applies on incomes above ₹50 lakh.

Detailed Feature Comparison

Feature	New Regime	Old Regime
Standard Deduction (Salaried)	₹75,000	₹50,000
Rebate 87A (zero tax up to)	₹12,00,000	₹5,00,000
Section 80C (up to ₹1.5L)	Not available	Available
Section 80D — Health Insurance	Not available	Up to ₹25,000 (₹50,000 senior)
HRA Exemption	Not available	Available
NPS 80CCD(1B) — ₹50,000	Not available	Available
Home Loan Interest (Sec 24b)	Not available	Up to ₹2,00,000
Leave Travel Allowance (LTA)	Not available	Available
Tax rates	Lower slabs	Higher slabs
Surcharge (max rate)	25% of tax	37% of tax
Flexibility for deduction planning	Minimal	High
Suitable for those with many deductions	No	Yes

Key Decision Factors

Choose New Regime if…

Your taxable income is up to ₹12 lakh (zero tax via 87A rebate)
You're a salaried employee earning up to ₹12.75 lakh (₹12L + ₹75K std. deduction)
Your total deductions (80C + 80D + HRA + NPS + home loan) are under ₹3–3.75 lakh
You prefer simplicity over deduction planning
You have high income (₹5 crore+) — surcharge is capped at 25% vs 37%
You're a new employee without legacy investments

Choose Old Regime if…

You have high deductions: fully utilized 80C (₹1.5L), 80D, HRA, and NPS
You live in a metro city with significant HRA exemption
You have a home loan with interest above ₹1.5 lakh per year
You're in the ₹10L–₹30L income range with disciplined investments
You're a senior citizen with higher basic exemption (₹3L)
You have education loan interest under Section 80E

Pro tip: For most salaried individuals in FY 2025-26, the new regime is now the default and better option unless you have deductions exceeding the breakeven threshold. Use our Deduction Optimizer to find your exact breakeven point.

Frequently Asked Questions

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