New Tax Regime vs Old: A Complete FY 2025-26 Comparison
The slabs changed again this year and the rebate now stretches to ₹12L. Here's exactly when the new regime wins, when the old one still makes sense, and how to check your own number.
Budget 2025 revised the new regime slabs effective FY 2025-26 (AY 2026-27) and pushed the Section 87A rebate threshold up to ₹12,00,000 of taxable income. That single change flipped the decision for a lot of taxpayers who were sitting on the fence — so it is worth re-running the comparison even if you settled on a regime last year.
The new regime slabs for FY 2025-26
- ₹0 – ₹4,00,000: Nil
- ₹4,00,000 – ₹8,00,000: 5%
- ₹8,00,000 – ₹12,00,000: 10%
- ₹12,00,000 – ₹16,00,000: 15%
- ₹16,00,000 – ₹20,00,000: 20%
- ₹20,00,000 – ₹24,00,000: 25%
- Above ₹24,00,000: 30%
Salaried taxpayers also get a ₹75,000 standard deduction under the new regime, and — this is the part that changes everything — a full tax rebate if taxable income doesn’t exceed ₹12,00,000. Combined with the standard deduction, a salaried individual can effectively earn up to ₹12,75,000 and pay zero tax under the new regime.
What the old regime still has going for it
The old regime’s rebate caps out at ₹5,00,000 taxable income, far lower, but it lets you stack deductions the new regime doesn’t allow: Section 80C (up to ₹1.5L — PF, ELSS, life insurance, principal repayment on home loans), 80D (health insurance premiums), HRA exemption, and Section 24(b) interest on a home loan (up to ₹2L for a self-occupied property). If those add up to a large number relative to your income, the old regime can still win.
A worked example
Take a ₹15,00,000 salary with ₹1,50,000 of Section 80C deductions claimed. Under the new regime, standard deduction brings taxable income to ₹14,25,000, and the slab calculation works out to ₹97,500 in tax. Under the old regime, standard deduction (₹50,000) plus the ₹1,50,000 deduction bring taxable income to ₹13,00,000 — but at the old regime’s steeper rates, the bill comes to ₹2,10,600. At this deduction level, the new regime wins by well over a lakh.
The gap narrows the more deductions you can genuinely claim — a large home loan interest deduction on top of 80C and 80D can bring the old regime back into contention, especially in the ₹15L–₹25L range. There isn’t a single right answer; it depends entirely on your actual deduction total for the year.
Check your own number
Rather than estimate, run your actual income and deductions through our Income Tax Calculator — it computes both regimes side by side and tells you which one is lower for your specific numbers, not a generic example.
Have a question about your own numbers?
Talk to our team, or run the numbers yourself first.