Tax GuideFebruary 1, 202615 min read
New vs Old Tax Regime 2026: Which One Saves More Tax? Complete Comparison
Budget 2025 changed the new regime slabs significantly. Here's a detailed comparison with salary-wise breakdowns to help you choose the right regime for FY 2025-26.
Key Budget 2025 Changes
- No tax up to ₹12 lakh income under new regime (rebate u/s 87A)
- New regime is the default regime from FY 2023-24
- Standard deduction ₹75,000 available in both regimes
- Old regime better only if deductions exceed ₹3.75 lakh
New Tax Regime Slabs FY 2025-26 (Budget 2025)
| Income Slab | Tax Rate | Tax Amount |
|---|---|---|
| Up to ₹4,00,000 | Nil | ₹0 |
| ₹4,00,001 – ₹8,00,000 | 5% | ₹20,000 |
| ₹8,00,001 – ₹12,00,000 | 10% | ₹40,000 |
| ₹12,00,001 – ₹16,00,000 | 15% | ₹60,000 |
| ₹16,00,001 – ₹20,00,000 | 20% | ₹80,000 |
| ₹20,00,001 – ₹24,00,000 | 25% | ₹1,00,000 |
| Above ₹24,00,000 | 30% | — |
Rebate u/s 87A: If taxable income ≤ ₹12,00,000 → Total tax = ₹0 (effectively no tax up to ₹12.75L including standard deduction)
Old Tax Regime Slabs FY 2025-26
| Income Slab | Tax Rate |
|---|---|
| Up to ₹2,50,000 | Nil |
| ₹2,50,001 – ₹5,00,000 | 5% |
| ₹5,00,001 – ₹10,00,000 | 20% |
| Above ₹10,00,000 | 30% |
Which Regime is Better? — Salary-wise Comparison
| Gross Income | New Regime Tax | Old Regime Tax* | Better Choice |
|---|---|---|---|
| ₹7,00,000 | ₹0 | ₹0 | Either |
| ₹10,00,000 | ₹0 | ₹23,400 | New |
| ₹12,00,000 | ₹0 | ₹54,600 | New |
| ₹15,00,000 | ₹93,600 | ₹1,09,200 | New |
| ₹20,00,000 | ₹2,49,600 | ₹2,26,200 | Old (if deductions > ₹3.75L) |
| ₹30,00,000 | ₹5,61,600 | ₹4,99,200 | Old (if deductions > ₹4L) |
| ₹50,00,000 | ₹11,70,000 | ₹10,92,000 | Old (if deductions > ₹4L) |
*Old regime taxes shown with standard deduction (₹75K) only. With additional deductions (80C, 80D, HRA etc.), old regime tax reduces further.
Deductions Available Only in Old Regime
| Section | Deduction | Max Limit |
|---|---|---|
| 80C | PPF, ELSS, LIC, EPF, Home Loan Principal | ₹1,50,000 |
| 80CCD(1B) | NPS (additional) | ₹50,000 |
| 80D | Health Insurance | ₹25,000 (₹50K for senior) |
| Section 10(13A) | HRA Exemption | Based on formula |
| 80E | Education Loan Interest | No limit |
| 24(b) | Home Loan Interest | ₹2,00,000 |
| 80TTA | Savings Account Interest | ₹10,000 |
Decision Framework: When to Choose Which Regime
Choose New Regime If:
- Income below ₹12.75 lakh (zero tax)
- You don't have major deductions
- No HRA claim, no home loan
- You're a freelancer using 44ADA with income below ₹12L
- You prefer simplicity over tax planning
Choose Old Regime If:
- Total deductions exceed ₹3.75 lakh
- You claim HRA + 80C + 80D + home loan
- Income above ₹15L with heavy investments
- You invest in PPF, NPS, ELSS regularly
- You pay rent in a metro city
Freelancers Under 44ADA — Which Regime?
If you're a freelancer using Section 44ADA (presumptive taxation):
- Gross receipts up to ₹24L: New regime is almost always better (50% deemed profit = ₹12L, which is tax-free after ₹75K standard deduction)
- Gross receipts ₹24L–₹50L: Compare both regimes based on your deductions
- Gross receipts above ₹50L: 44ADA limit is ₹75L, but at higher incomes, old regime with deductions may save more
Compare Both Regimes for Your Exact Salary
Use our free tax calculator to see which regime saves more tax for your specific income and deductions.