New vs Old Tax Regime: Which Should You Choose in FY 2025-26?

Since the Union Budget 2023, India has had two parallel income tax regimes for individuals: the new regime (now the default) with lower slab rates but almost no exemptions, and the old regime with higher rates but many deductions such as 80C, 80D and HRA.

New Regime Slabs (FY 2025-26)

Under the new regime, income up to ₹4,00,000 is tax-free, followed by 5% up to ₹8L, 10% up to ₹12L, 15% up to ₹16L, 20% up to ₹20L, 25% up to ₹24L, and 30% beyond that. A standard deduction of ₹75,000 applies, and a full tax rebate makes tax liability zero for taxable income up to ₹12,00,000.

Old Regime Slabs

The old regime taxes income up to ₹2,50,000 at nil, 5% up to ₹5L, 20% up to ₹10L, and 30% beyond that, with a ₹50,000 standard deduction. It allows deductions such as Section 80C (up to ₹1.5L for PPF, ELSS, etc.), 80D (health insurance), and HRA exemption for salaried employees who pay rent.

Which One Should You Pick?

If you claim large deductions (home loan interest, 80C investments, HRA), the old regime may still work out cheaper. If you have few deductions, the new regime's lower rates usually win. The only way to know for sure is to compute both for your exact numbers.

Use our Income Tax Calculator to compare your tax liability side-by-side under both regimes in seconds.