🧾 Tax Planning 9 min read·Updated 1 July 2026
Old vs New Tax Regime FY 2025-26: Which Should You Pick?
From FY 2025-26, the new regime is the default. It offers lower slab rates but almost no deductions. The old regime rewards those who invest in 80C, take a home loan, and pay health insurance premiums.
New regime slabs (FY 2025-26)
- Up to ₹4 lakh: Nil
- ₹4–8 lakh: 5%
- ₹8–12 lakh: 10%
- ₹12–16 lakh: 15%
- ₹16–20 lakh: 20%
- ₹20–24 lakh: 25%
- Above ₹24 lakh: 30%
- Standard deduction: ₹75,000. Section 87A rebate makes tax nil up to ₹12 lakh taxable income.
Old regime slabs
- Up to ₹2.5 lakh: Nil
- ₹2.5–5 lakh: 5%
- ₹5–10 lakh: 20%
- Above ₹10 lakh: 30%
- Deductions available: 80C (₹1.5 lakh), 80D, HRA, home-loan interest, LTA, and more.
Rule of thumb
If your qualifying deductions cross ~₹3–4 lakh on incomes above ₹12–15 lakh, the old regime usually wins.
If you rent, invest little in 80C, and have no home-loan interest, the new regime is almost always better.
Pro tips
- Recompute every year — a home-loan closure or job change can flip the answer.
- Salaried employees can switch every year; business owners have a one-time switch out of the new regime.
Frequently asked questions
Is the new regime always cheaper?+
No. For high-deduction taxpayers (home loan + 80C + 80D + HRA), the old regime is often still better.
Do I still need to file if my tax is zero?+
If your gross income exceeds the basic exemption, yes — filing is mandatory.
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