Key points
- The new regime is the default, with lower slab rates and almost no deductions.
- Salaried people pay no tax in the new regime up to ₹12.75 lakh of salary, thanks to the ₹75,000 standard deduction and the rebate.
- The old regime wins only with large deductions — about ₹5.4 lakh at a ₹15 lakh salary and ₹7–8 lakh at ₹20 lakh and above.
- Salaried taxpayers can switch every year when filing; business owners have far less flexibility.
The slabs side by side
For individuals below 60, for FY 2025-26 and FY 2026-27:
| Taxable income | New regime | Old regime |
|---|---|---|
| Up to ₹2.5 lakh | Nil | Nil |
| ₹2.5 lakh – ₹4 lakh | Nil | 5% |
| ₹4 lakh – ₹5 lakh | 5% | 5% |
| ₹5 lakh – ₹8 lakh | 5% | 20% |
| ₹8 lakh – ₹10 lakh | 10% | 20% |
| ₹10 lakh – ₹12 lakh | 10% | 30% |
| ₹12 lakh – ₹16 lakh | 15% | 30% |
| ₹16 lakh – ₹20 lakh | 20% | 30% |
| ₹20 lakh – ₹24 lakh | 25% | 30% |
| Above ₹24 lakh | 30% | 30% |
A 4% health and education cess applies to the tax in both regimes, plus a surcharge on incomes above ₹50 lakh (capped at 25% in the new regime).
Rebate and standard deduction
- New regime: a rebate under Section 87A makes tax nil if taxable income is up to ₹12 lakh. Salaried employees also get a ₹75,000 standard deduction, so salary up to ₹12.75 lakh is tax-free. Just above ₹12 lakh, marginal relief ensures the tax never exceeds the income above ₹12 lakh.
- Old regime: the rebate makes tax nil only up to ₹5 lakh of taxable income, and the standard deduction is ₹50,000.
Which deductions each regime allows
| Deduction or exemption | Old regime | New regime |
|---|---|---|
| Standard deduction (salary) | ₹50,000 | ₹75,000 |
| Section 80C (EPF, PPF, ELSS, insurance, principal on home loan…) | Up to ₹1.5 lakh | No |
| Section 80D (health insurance) | Up to ₹25,000–₹1 lakh | No |
| HRA and LTA exemptions | Yes | No |
| Home loan interest, self-occupied (24b) | Up to ₹2 lakh | No |
| NPS own contribution, 80CCD(1B) | Up to ₹50,000 | No |
| Employer NPS contribution, 80CCD(2) | Up to 10% of basic + DA | Up to 14% of basic + DA |
| Education loan interest (80E) | Yes | No |
Tax at common salaries
Tax payable by a salaried individual below 60, including cess. The old-regime column assumes ₹1.5 lakh under 80C and ₹25,000 under 80D — a typical set of deductions without HRA or a home loan.
| Gross salary | New regime | Old regime (₹1.75 lakh deductions) |
|---|---|---|
| ₹8 lakh | ₹0 | ₹28,600 |
| ₹12.75 lakh | ₹0 | ₹1,32,600 |
| ₹15 lakh | ₹97,500 | ₹2,02,800 |
| ₹20 lakh | ₹1,92,400 | ₹3,58,800 |
| ₹30 lakh | ₹4,75,800 | ₹6,70,800 |
The break-even: how much deduction makes the old regime worth it?
The old regime pays off only when your deductions and exemptions (beyond the standard deduction) exceed a break-even amount. Approximate figures:
| Gross salary | Deductions needed for the old regime to win |
|---|---|
| ₹12.75 lakh | About ₹7.25 lakh |
| ₹15 lakh | About ₹5.4 lakh |
| ₹20 lakh | About ₹7.1 lakh |
| ₹25 lakh and above | About ₹8 lakh |
Reaching ₹5–8 lakh usually needs a combination of a large HRA exemption, the full ₹2 lakh home loan interest, the full ₹1.5 lakh of 80C, 80D and NPS. Most salaried people fall short, which is why the new regime is now the better choice for the majority. Check your own numbers with the income tax calculator, which compares both regimes.
Switching between regimes
If you have no business income, you can choose the regime every year when you file your return, regardless of what you told your employer for TDS. If you have business or professional income, you can switch from the new regime to the old only once in your lifetime (and back once), and must file the opt-out form before the return due date.
The Income-tax Act, 2025 replaced the 1961 Act from 1 April 2026 and renumbered sections; the familiar numbers are used here. Always confirm the current rules before filing.
Frequently asked questions
Is income up to ₹12 lakh tax-free in the new regime?
Yes, when taxable income is up to ₹12 lakh, because of the Section 87A rebate. For salaried people, the ₹75,000 standard deduction takes this to ₹12.75 lakh of salary. Income taxed at special rates, such as capital gains, is treated separately.
Can I claim HRA in the new tax regime?
No. HRA exemption, LTA, Section 80C, 80D and home loan interest on a self-occupied house are all old-regime benefits.
Which regime is better for a ₹15 lakh salary?
With typical deductions of ₹1.5 lakh under 80C and ₹25,000 under 80D, the new regime costs ₹97,500 against ₹2,02,800 in the old. The old regime wins only if your deductions and exemptions exceed roughly ₹5.4 lakh.
Can senior citizens get a higher exemption in the new regime?
No. The new regime has the same slabs for everyone. The old regime has a higher basic exemption for senior citizens (₹3 lakh) and super senior citizens (₹5 lakh).
What if I told my employer the wrong regime?
If you have no business income, you can choose the other regime when filing your return. Any extra tax deducted will be refunded, or you pay the shortfall with interest if less was deducted.