adminOld regime or new regime? It is the question almost every taxpayer asks each year. For FY 2025-26 the new regime has become even more attractive, but the old regime can still win if you claim large deductions. Here is how to decide.
New Regime slabs (FY 2025-26)
| Income slab | Tax rate |
|---|---|
| Up to ₹4,00,000 | Nil |
| ₹4,00,001 – ₹8,00,000 | 5% |
| ₹8,00,001 – ₹12,00,000 | 10% |
| ₹12,00,001 – ₹16,00,000 | 15% |
| ₹16,00,001 – ₹20,00,000 | 20% |
| ₹20,00,001 – ₹24,00,000 | 25% |
| Above ₹24,00,000 | 30% |
With the Section 87A rebate, an income up to ₹12 lakh pays zero tax under the new regime. Salaried individuals also get a ₹75,000 standard deduction, pushing the effective tax-free salary to about ₹12.75 lakh. The new regime is the default — you do not need to opt in.
Old Regime: still relevant for some
The old regime keeps the familiar slabs (nil up to ₹2.5 lakh, 5% to ₹5 lakh, 20% to ₹10 lakh, 30% above) but lets you claim deductions the new regime does not: Section 80C (up to ₹1.5 lakh), 80D health insurance, HRA, LTA, home loan interest under Section 24(b), and more. If your deductions are large, the old regime can still produce a lower bill.
How to decide
The rule of thumb: the more deductions you genuinely claim, the more likely the old regime wins. If you have a home loan, pay rent (HRA), and max out 80C and 80D, run both calculations. If your deductions are modest, the new regime almost always comes out ahead because of its wider slabs and the ₹12 lakh rebate.
Salaried employees can switch regimes every year at the time of filing. Those with business or professional income must file Form 10-IEA to opt for the old regime, and the choice is harder to reverse.
Compare both in seconds with our Income Tax Calculator, or let MoreofTax optimise it for you — call +91 96575 53795.
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Frequently Asked Questions
Is income up to ₹12 lakh really tax-free?
Yes. Under the new regime for FY 2025-26, the Section 87A rebate makes tax nil for a total income up to ₹12 lakh. For salaried individuals the ₹75,000 standard deduction raises this to roughly ₹12.75 lakh.
Which regime is the default?
The new regime is the default. You must specifically opt for the old regime if you want to claim deductions like 80C, HRA and home loan interest.
Can I switch regimes every year?
Salaried individuals without business income can choose afresh each year while filing. Taxpayers with business income must file Form 10-IEA to use the old regime and have limited ability to switch back.