Which tax regime is better for me — New or Old?

It depends entirely on your income level and how many deductions you can claim. Here is the general rule: New Regime is better if: ✓ Your income is below ₹12.75L (salaried) — zero tax either way, but new regime is simpler ✓ Your total extra deductions (above standard deduction) are low ✓ You don't pay rent or have a home loan ✓ You prefer simplicity over tax planning ✓ Your income is above ₹2Cr (25% surcharge cap vs 37% in old regime) Old Regime is better if: ✓ You have large 80C investments (₹1.5L) ✓ You pay significant rent with HRA exemption ✓ You have a home loan with ₹2L interest deduction ✓ You contribute to NPS (extra ₹50K under 80CCD(1B)) ✓ Your parents are senior citizens (higher 80D limit ₹50K) Break-even extra deduction levels (salaried, FY 2025-26): ₹7L income: Old wins if extra deductions > ₹1.5L ₹10L income: Old wins if extra deductions > ₹4.5L ₹15L income: Old wins if extra deductions > ₹5.44L ₹20L income: Old wins if extra deductions > ₹7.09L ₹30L+ income: Old wins if extra deductions > ₹8L For most salaried employees earning ₹10-20L without a home loan or large HRA, the New Regime saves significant money. Use this calculator to find your exact answer.

What is the default tax regime in FY 2025-26?

From FY 2023-24 onwards, the New Tax Regime is the DEFAULT for all taxpayers. This means: - If you don't explicitly choose a regime, the New Regime applies automatically - Your employer will deduct TDS under the New Regime by default unless you inform them otherwise - If you want the Old Regime, you must communicate your choice to your employer (for TDS purposes) and declare it in your ITR How to opt for Old Regime: - Inform your employer at the start of the financial year using Form 10-IEA - Employer will then deduct TDS under Old Regime - At ITR filing, you can also switch even if TDS was deducted under a different regime - For salaried: Can switch every year — no restriction - For business income: Old-to-New is a one-time switch; New-to-Old can be done once Deadline to inform employer: Typically January/February each year, before your employer computes the final TDS for the year. After March, the switch can only be made at ITR filing time. If you do nothing: New Regime applies, and you get the standard deduction of ₹75,000 automatically.

Can I switch between New and Old Regime every year?

The switching rules differ between salaried and non-salaried: Salaried employees: ✓ Can switch between New and Old Regime EVERY YEAR ✓ Decision is made at the time of ITR filing (deadline July 31) ✓ Can inform employer mid-year to change TDS deduction ✓ Even if employer deducts TDS under New Regime, you can claim Old Regime at ITR filing (or vice versa) — subject to refund/payment of difference ✓ No penalty or form required beyond the ITR declaration Self-employed / Business income: ✗ More restrictive — effectively a one-time choice ✓ Can switch from New Regime to Old Regime ONCE using Form 10-IEA ✗ If Old Regime is chosen and then switched back to New Regime, cannot switch to Old Regime again Practical strategy for salaried: - Run this comparison every year (especially if your salary, HRA, or deductions change significantly) - Major life events that change the decision: getting a home loan (adds ₹2L deduction), moving to a metro city (higher HRA), having children (tuition fee under 80C), parents crossing 60/80 years (higher 80D) - Always compare BEFORE March 31 each year so you can inform your employer in time

What deductions are available in New Regime vs Old Regime?

NEW REGIME — Deductions/exemptions available: ✓ Standard deduction: ₹75,000 (salaried/pensioners, introduced in Budget 2023) ✓ Employer's NPS contribution under 80CCD(2) — up to 10% of basic+DA ✓ Agniveer Corpus Fund exemption (80CCH) ✓ Gratuity exemption under Sec 10(10) ✓ Leave encashment exemption ✓ Voluntary Retirement Scheme exemption ✗ NO: 80C, 80D, HRA, LTA, home loan interest 24b, 80CCD(1B) NPS, 80E, 80G, 80TTA OLD REGIME — Major deductions available: ✓ Standard deduction: ₹50,000 ✓ 80C: ₹1,50,000 (PPF, ELSS, EPF, LIC, home loan principal, tuition) ✓ 80CCD(1B): ₹50,000 extra NPS ✓ 80D: ₹25,000 (self+family) + ₹25,000/₹50,000 (parents/senior parents) ✓ HRA exemption under 10(13A): varies ✓ Home loan interest under 24b: ₹2,00,000 ✓ LTA: actual exempted travel ✓ 80E: Education loan interest (no limit) ✓ 80G: Charitable donations (50-100%) ✓ 80TTA/80TTB: Savings account interest (₹10K/₹50K for seniors) Key insight: The New Regime's ₹75K standard deduction vs Old Regime's ₹50K is a ₹25K advantage for New Regime at the outset. The Old Regime then needs to overcome this gap PLUS match the lower slab rates of the New Regime through additional deductions.

Why does the New Regime win for most incomes even without deductions?

The New Regime was redesigned in Budget 2025 with substantially lower tax rates that make it attractive even without deductions: Rate comparison at key income brackets: For income from ₹4L to ₹8L: New Regime: 5% Old Regime: 5% (same rate, but kicks in from ₹2.5L) Advantage: New regime has a larger zero-tax band (₹4L vs ₹2.5L) For income from ₹8L to ₹10L: New Regime: 10% Old Regime: 20% Advantage: New regime — 10% lower rate on ₹2L = ₹20,000 saving For income from ₹10L to ₹12L: New Regime: 10-15% Old Regime: 30% Advantage: New regime — massive saving For income above ₹12L: New Regime: 15-30% (with 87A rebate up to ₹12L) Old Regime: 30% (kicks in above ₹10L) Additionally, for salaried employees: New Regime standard deduction: ₹75,000 vs Old Regime: ₹50,000 (₹25K advantage) New Regime 87A rebate: up to ₹12L taxable (vs ₹5L in Old Regime) The cumulative effect of the larger zero-tax band, lower rates in the 10-20% range, higher standard deduction, and higher 87A rebate makes the New Regime significantly better for most individuals without substantial deductions.

New vs Old Tax Regime Comparison — Which Is Better For You? FY 2025-26

🇮🇳 Enter your income + all deductions — instantly see which regime saves more money, by how much, and why

The definitive New vs Old Tax Regime comparison calculator for FY 2025-26. Enter your income, employment type, age group, and all your deductions — the calculator instantly computes both regimes side by side and declares the winner with the exact annual saving. Inputs: gross income (₹5L to ₹1Cr pres..

YOUR DETAILS

EMPLOYMENT TYPE

AGE GROUP (affects old regime slabs)

GROSS ANNUAL INCOME

₹₹15.00 L

OLD REGIME DEDUCTIONS (affects old regime only)

80C (PPF, ELSS, LIC, EPF…)

max ₹1.5L

₹

max ₹1.50 L

80D Health insurance

max ₹75K (incl. parents)

₹

max ₹75.0K

NPS 80CCD(1B)

max ₹50K extra

₹

max ₹50.0K

HRA exemption

Section 10(13A)

₹

max ₹1.00 Cr

Home loan interest 24b

max ₹2L self-occupied

₹

max ₹2.00 L

Other (80E, 80G, 80TTA…)

enter total

₹

max ₹1.00 Cr

Total extra deductions: ₹2,25,000 + ₹50K std ded = ₹2,75,000

NEW REGIME

✓ BETTER FOR YOU

TOTAL TAX PAYABLE

₹97.5K

EFFECTIVE RATE

6.50%

MONTHLY TAKE-HOME

₹1,16,875

BREAKDOWN

Gross income₹15,00,000

Standard deduction−₹75,000

Taxable income₹14,25,000

Tax on slabs₹93,750

4% H&E Cess₹3,750

TOTAL TAX₹97,500

Annual take-home₹14,02,500

New Regime perks:

✓ Zero tax up to ₹12.75L (salaried)
✓ Simpler — no investment proof needed
✓ 25% surcharge cap (vs 37% old regime)

OLD REGIME

TOTAL TAX PAYABLE

₹1.87 L

EFFECTIVE RATE

12.48%

MONTHLY TAKE-HOME

₹1,09,400

BREAKDOWN

Gross income₹15,00,000

Std deduction + all deductions−₹2,75,000

Taxable income₹12,25,000

Tax on slabs₹1,80,000

4% H&E Cess₹7,200

TOTAL TAX₹1,87,200

Annual take-home₹13,12,800

Old Regime perks:

✓ Full 80C (₹1.5L) + NPS (₹50K)
✓ HRA exemption for rent payers
✓ Home loan interest ₹2L deduction

VERDICT

✅ New Regime is better

Switch to New Regime — save ₹89,700 per year (₹7,475/month)

ANNUAL SAVING

₹89.7K

₹7,475/month

Break-even for your income (₹15,00,000): Old regime beats New regime only if your total extra deductions (above standard deduction) exceed ₹8.00 L. Your current extra deductions: ₹2,25,000 → ❌ Need ₹5,75,000 more deductions for Old Regime to win

REGIME COMPARISON — 10 COMMON INCOMES (SALARIED, ZERO EXTRA DEDUCTIONS) FY 2025-26

Income	New Regime Tax	Old Regime Tax	New Saves	Better Regime
₹5.00 L	NIL 🎉	NIL	—	Equal
₹7.00 L	NIL 🎉	₹44,200	+₹44,200	New ✓
₹10.00 L	NIL 🎉	₹1,06,600	+₹1,06,600	New ✓
₹12.75 L	NIL 🎉	₹1,87,200	+₹1,87,200	New ✓
₹13.00 L	₹66,300	₹1,95,000	+₹1,28,700	New ✓
₹15.00 L	₹97,500	₹2,57,400	+₹1,59,900	New ✓
₹20.00 L	₹1,92,400	₹4,13,400	+₹2,21,000	New ✓
₹30.00 L	₹4,75,800	₹7,25,400	+₹2,49,600	New ✓
₹50.00 L	₹10,99,800	₹13,49,400	+₹2,49,600	New ✓
₹1.00 Cr	₹29,25,780	₹32,00,340	+₹2,74,560	New ✓

Zero extra deductions assumed. Click any row to load that income. New Regime wins for most incomes without significant deductions.

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New vs Old Tax Regime · FY 2025-26 (AY 2026-27) · Budget 2025 · New: 0–30% slabs, ₹75K std ded, 87A up to ₹12L · Old: 0–30% slabs, ₹50K std ded, all deductions · For informational purposes — consult a CA before switching.