13 July 2026 · 8 min read
For most salaried individuals without large deductions, the New Regime wins for FY 2025-26 — Budget 2025 raised the tax-free threshold to ₹12.75 lakh for salaried taxpayers. But if you have significant HRA, home loan interest, or 80C/80D investments, the Old Regime can still come out ahead. There is no single right answer — it depends entirely on your deductions.
Budget 2025 made the New Regime significantly more attractive. The basic exemption limit rose to ₹4 lakh, the standard deduction for salaried individuals increased to ₹75,000, and the Section 87A rebate now covers taxable income up to ₹12 lakh — bringing the effective tax-free threshold to ₹12.75 lakh for salaried taxpayers once the standard deduction is applied.
The Old Regime's slabs and deductions remain unchanged from previous years — basic exemption of ₹2.5 lakh, with 80C, 80D, HRA, and home loan interest deductions still available.
Plus: a ₹75,000 standard deduction for salaried employees, and a Section 87A rebate that zeroes out tax entirely for taxable income up to ₹12 lakh — making salaried income up to ₹12.75 lakh effectively tax-free.
Standard deduction remains ₹50,000. Section 87A rebate applies only up to ₹5 lakh taxable income — far lower than the New Regime's ₹12 lakh threshold. What the Old Regime offers instead is the ability to claim deductions: 80C (up to ₹1.5L), 80D health insurance, HRA exemption, and home loan interest under Section 24(b).
₹8 lakh gross salary, minimal deductions (~₹50,000): New Regime results in zero tax after standard deduction and rebate. Old Regime, even with modest 80C use, results in a real tax outflow. New Regime wins clearly here.
₹15 lakh gross salary, moderate deductions (₹2.5L combined — 80C, 80D, HRA): This is the genuinely close case. Under the New Regime, tax applies from ₹8L onward with no deductions, but the lower slab rates still often produce a comparable or lower bill than the Old Regime even after subtracting ₹2.5L of deductions. Run your exact numbers — this is where the gap narrows the most.
₹25 lakh gross salary, high deductions (₹4L+ — home loan interest, 80C, 80D, NPS): The Old Regime can pull ahead here, since a large home loan interest deduction alone can offset a meaningful chunk of taxable income before the 30% slab kicks in. Households with an active home loan should always run both regimes before assuming New Regime is better.
These are illustrative patterns, not your exact tax liability — the right answer depends on your precise deduction mix. Use the calculator below to get your specific numbers.
If your total annual deductions (80C + 80D + HRA + home loan interest + NPS) are under roughly ₹2-2.5 lakh, the New Regime is very likely better for you. If they exceed ₹3.5-4 lakh — typically because of a home loan or substantial HRA — the Old Regime is worth checking carefully. Between those two points, the outcome depends on your exact salary structure and deduction mix, so calculate both rather than guessing.
Many taxpayers simply carry forward whatever regime they picked last year without re-running the numbers. Since Budget 2025 meaningfully changed the New Regime's math, a comparison that made sense for FY 2024-25 may no longer hold for FY 2025-26. It's worth recalculating every year, especially after a raise, a new home loan, or a change in your investment mix.
Skip the estimation — enter your actual salary and deductions and see your exact tax liability under both regimes side by side.
Open Tax Calculator →This article is for informational purposes only and does not constitute personalised tax advice. Consult a Chartered Accountant or SEBI-registered advisor for decisions specific to your situation. Figures reflect Budget 2025 provisions applicable to FY 2025-26 (AY 2026-27).