Old vs New Tax Regime: Which Should You Choose?
The new regime has lower rates and makes ₹12 lakh tax-free, but drops most deductions. The old regime taxes higher but lets you claim them all. Here's how to tell which one saves you more.
Compare both in the calculator →The new regime is the default — lower slab rates, a ₹4 lakh exemption, and income up to ₹12 lakh tax-free, but almost no deductions. The old regime has higher rates and a ₹2.5 lakh exemption, but lets you claim 80C, 80D, HRA, home-loan interest and more. Heavy on deductions → old often wins. Few deductions → new usually wins.
The slabs, side by side
For resident individuals below 60, FY 2025-26. The new regime has more slabs but lower rates; the old regime is simpler but steeper.
+ ₹75,000 standard deduction · ₹12 lakh tax-free via Section 87A
+ ₹50,000 standard deduction · ₹5 lakh tax-free via Section 87A
Seniors get a higher old-regime exemption: ₹3 lakh (60–80) and ₹5 lakh (80+).
Old vs new: the key differences
*Old-regime exemption is ₹3 lakh for seniors (60–80) and ₹5 lakh for super-seniors (80+). The new regime trades away 70-plus deductions for lower rates.
Which regime is better for you?
New regime wins if…
- You have few or no deductions to claim
- You don't invest much in 80C / insurance
- Your income is up to ₹12 lakh (likely zero tax)
- You want the simplest possible filing
Old regime wins if…
- You max 80C (₹1.5L) and claim 80D
- You get HRA, or pay home-loan interest
- Your total deductions are large
- Together they outweigh the lower new-regime rates
Rough guide: deductions under about ₹2 lakh → new regime usually wins; above roughly ₹3.75–4 lakh → old regime usually wins. In between, it's close — so compute both.
How to choose your regime
Salaried & pensioners
The new regime applies by default. To use the old one, simply select it while filing — and you can switch your choice every year, whichever saves more that year.
Business & professional income
To opt for the old regime you must file Form 10-IEA by the due date. Switching back is restricted — broadly, a one-time move — so choose with care.
ITR-4 (presumptive) · ITR-3 (business)See both regimes for your exact numbers
The break-even depends on your income and your deductions. Rather than rely on a rule of thumb, run your figures through both regimes in seconds and see the winner.
Open the income tax calculator →Old vs new regime — FAQs
Which tax regime is better, old or new?
It depends on your deductions. If you claim large deductions — 80C, 80D, HRA, home-loan interest — the old regime often wins. With few deductions, the new regime's lower rates usually win. The only sure way is to compute both.
What is the new tax regime?
A simplified regime with lower slab rates, a ₹4 lakh basic exemption and income up to ₹12 lakh tax-free, but with most deductions and exemptions removed. It is the default from FY 2023-24.
Is income up to ₹12 lakh really tax-free?
Yes, under the new regime for FY 2025-26 — a Section 87A rebate of up to ₹60,000 brings tax on income up to ₹12 lakh to zero. For salaried individuals the ₹75,000 standard deduction pushes the tax-free salary to ₹12.75 lakh.
Can I switch between the old and new regime?
Salaried individuals can choose afresh every year. Those with business or professional income must file Form 10-IEA to opt for the old regime, and switching back is restricted.
Which regime is the default?
The new regime. If you do nothing, your tax is computed under it; you have to actively opt for the old regime.
Are deductions like 80C allowed in the new regime?
Mostly no. The new regime drops over 70 deductions and exemptions, including 80C, 80D, HRA and LTA. A standard deduction and the employer's NPS contribution are among the few still allowed.