Regime choice · FY 2025-26 (AY 2026-27)
Old vs new tax regime: which one saves you more?
The new regime is the default for FY 2025-26 and is cheaper for most salaried taxpayers — but not all. Here are the slabs for both, how the choice works, and how to find your break-even point.
New regime slabs — FY 2025-26 (AY 2026-27)
The new regime offers lower rates across wider bands and a ₹75,000 standard deduction for salaried taxpayers, but disallows most deductions and exemptions. The Section 87A rebate makes tax zero up to ₹12,00,000 of taxable income.
| Taxable income | Rate |
|---|---|
| Up to ₹4,00,000 | Nil |
| ₹4,00,001 – ₹8,00,000 | 5% |
| ₹8,00,001 – ₹12,00,000 | 10% |
| ₹12,00,001 – ₹16,00,000 | 15% |
| ₹16,00,001 – ₹20,00,000 | 20% |
| ₹20,00,001 – ₹24,00,000 | 25% |
| Above ₹24,00,000 | 30% |
A health and education cess of 4% applies on the tax in both regimes.
Old regime slabs — FY 2025-26
The old regime keeps the familiar slabs and, crucially, the full set of deductions and exemptions — 80C, 80D, 80CCD(1B), HRA, LTA, home-loan interest and more. Its standard deduction is ₹50,000, and the 87A rebate makes tax zero up to ₹5,00,000 of taxable income.
| Taxable income | 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% |
How the choice actually works
The new regime gives you lower rates but almost no deductions. The old regime gives you higher rates but lets you subtract a lot before tax is computed. So the question is simply: do your deductions save you more than the new regime's lower rates and bigger rebate?
- Few deductions (you rent modestly, no home loan, limited 80C): the new regime almost always wins.
- Heavy deductions (full 80C + NPS + 80D + home-loan interest + significant HRA): the old regime can still win, especially above ₹15 lakh salary.
- Income up to ₹12.75 lakh as a salaried person: the new regime can mean zero tax — hard to beat.
Worked example — ₹12 lakh salary
Find your break-even — on your numbers
Generic advice only goes so far, because the answer turns on your exact deductions. The free old vs new regime calculator lets you test both in your browser, and DrishtiTax computes the same comparison from your actual Form 16 so you can choose with certainty before you file.
Frequently asked questions
Educational information
This page is general information for salaried taxpayers in India, not legal, financial or chartered-accountancy advice. Tax outcomes depend on your full, individual circumstances. Figures use FY 2025-26 (AY 2026-27) rules and may change. Verify against official sources or a qualified professional before acting.
Which regime is cheaper for you?
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