Old vs New tax regime: which should you pick?

The core difference

The old regime has higher tax rates but lets you subtract a long list of deductions and exemptions — Section 80C, 80D, HRA, home-loan interest and more. The new regime has lower, simpler slabs but strips away most of those deductions. You are trading deductions for lower rates.

New regime slabs (FY 2025-26)

The new regime is now the default. It offers a standard deduction of ₹75,000 for salaried taxpayers and a Section 87A rebate that makes income up to ₹12 lakh (before standard deduction) effectively tax-free. Slabs rise in steps from 5% to 30%, but those steps start higher than under the old regime.

When the old regime still wins

The old regime pays off when your deductions are large. If you fully use the ₹1.5 lakh 80C limit, pay health-insurance premiums under 80D, claim HRA and have a home loan, your taxable income can drop enough that the higher rates still produce a smaller bill.

As a rough guide: the more of the following you genuinely claim, the more likely the old regime wins.

• ₹1.5 lakh in 80C (EPF, PPF, ELSS, life insurance, principal repayment)
• Health insurance under 80D
• Significant HRA because you rent in a metro
• Home-loan interest under Section 24(b)

A simple break-even test

Add up the deductions you will actually claim — not the theoretical maximum. If that total is small (you don't invest much under 80C, don't pay rent, have no home loan), the new regime almost always wins. If your deductions are large, run both and compare. The break-even point sits where the tax saved by lower new-regime rates equals the tax saved by old-regime deductions.

Decide in five minutes

Don't guess. Enter your salary and your real deductions once, and let the calculator compute the tax under both regimes side by side. Pick the smaller number — and remember you can switch each year if your circumstances change.