After Budget 2025, the new tax regime makes salary up to ₹12.75 lakh completely tax-free — no investments required, no paperwork, no HRA receipts. The old regime? You need ₹5-8 lakh in deductions just to match the new regime's tax outgo. For a ₹15 lakh salary: new regime tax is ₹97,500 while old regime with moderate deductions (₹2.25 lakh) costs ₹1,87,200 — the new regime saves ₹89,700. The old regime only wins if you have ₹5.44 lakh+ in total deductions at that income level.
This guide compares both regimes with verified math at every salary level from ₹6 lakh to ₹30 lakh, shows the exact break-even deduction amount, lists every deduction lost and kept in the new regime, and gives you a clear decision framework — all updated for FY 2025-26 as per Union Budget 2025. For the related impact on your investments, see our Section 80C guide.
Use our Income Tax Calculator to compare old vs new regime with your exact salary and deductions. Also see our Salary Hike Calculator to check if your raise beats inflation.
Tax Slab Comparison: Old vs New Regime (FY 2025-26)
| Income Slab | New Regime Rate | Old Regime Rate (Below 60) |
|---|---|---|
| Up to ₹2.5L | 0% | 0% |
| ₹2.5L - ₹4L | 0% | 5% |
| ₹4L - ₹5L | 5% | 5% |
| ₹5L - ₹8L | 5% | 20% |
| ₹8L - ₹10L | 10% | 20% |
| ₹10L - ₹12L | 10% | 30% |
| ₹12L - ₹16L | 15% | 30% |
| ₹16L - ₹20L | 20% | 30% |
| ₹20L - ₹24L | 25% | 30% |
| Above ₹24L | 30% | 30% |
The key difference: old regime hits 30% at ₹10 lakh taxable income, while new regime reaches 30% only at ₹24 lakh. For the ₹10-24 lakh range — where most middle-class salaries fall — the new regime charges 10-25% vs old regime's flat 30%. This structural advantage is why the new regime wins for most people, even without deductions. Both regimes add 4% health and education cess on top. The new regime is the default under Section 115BAC; you must actively opt for the old regime if you want it.
Tax at Every Salary Level (Verified, Including 4% Cess)
| Gross Salary | New Regime Tax | Old (No Deductions) | Old (₹1.5L 80C only) | Old (₹4.25L Heavy) | Old (₹5.75L Maximum) |
|---|---|---|---|---|---|
| ₹6L | ₹0 | ₹23,400 | ₹0 | ₹0 | ₹0 |
| ₹8L | ₹0 | ₹65,000 | ₹33,800 | ₹0 | ₹0 |
| ₹10L | ₹0 | ₹1,06,600 | ₹75,400 | ₹18,200 | ₹0 |
| ₹12L | ₹0 | ₹1,63,800 | ₹1,17,000 | ₹59,800 | ₹28,600 |
| ₹12.75L | ₹0 | ₹1,87,200 | ₹1,40,400 | ₹75,400 | ₹44,200 |
| ₹15L | ₹97,500 | ₹2,57,400 | ₹2,10,600 | ₹1,24,800 | ₹91,000 |
| ₹20L | ₹1,92,400 | ₹4,13,400 | ₹3,66,600 | ₹2,80,800 | ₹2,34,000 |
| ₹25L | ₹3,19,800 | ₹5,69,400 | ₹5,22,600 | ₹4,36,800 | ₹3,90,000 |
| ₹30L | ₹4,75,800 | ₹7,25,400 | ₹6,78,600 | ₹5,92,800 | ₹5,46,000 |
Green cells show where new regime wins (₹0 tax up to ₹12.75L). Old regime only shows green at ₹15L salary with maximum deductions (₹5.75L) — saving just ₹6,500. At ₹20L+, new regime wins even against maximum deductions. The old regime deduction buckets: basic = 80C ₹1.5L only; heavy = 80C + 80D + HRA + NPS (₹4.25L); maximum = + home loan interest (₹5.75L). For NPS tax benefits and EPF deduction details, see our guides.
Calculate Your Exact Tax Savings
Enter your salary, HRA, home loan, and investments to see which regime saves more.
Open Income Tax Calculator →Break-Even Deductions: How Much Do You Need for Old Regime to Win?
| Gross Salary | New Regime Tax | Break-Even Deductions | Typical Max Deductions | Old Regime Likely Wins? |
|---|---|---|---|---|
| ₹8L | ₹0 | ₹2.50L | ~₹2.0L | No — new is tax-free |
| ₹10L | ₹0 | ₹4.50L | ~₹3.5L | No — new is tax-free |
| ₹12L | ₹0 | ₹6.50L | ~₹4.5L | No — new is tax-free |
| ₹15L | ₹97,500 | ₹5.44L | ~₹4.5-5.75L | Maybe — only with HRA + home loan |
| ₹20L | ₹1,92,400 | ₹7.09L | ~₹5.75L | Usually no |
| ₹25L | ₹3,19,800 | ₹8.01L | ~₹5.75L | No — gap too large |
The break-even deduction is the amount you need in the old regime for it to match the new regime's tax. At ₹15 lakh, you need ₹5.44 lakh — achievable only if you have metro HRA (₹2-3L) PLUS 80C (₹1.5L) PLUS 80D (₹25K) PLUS NPS (₹50K) or home loan interest (₹2L). At ₹20L+, the gap is so large that old regime rarely wins. The verdict: for most salaried Indians without metro HRA and home loan, the new regime is clearly better in FY 2025-26.
Deductions Lost vs Kept in New Regime
| Deduction | Section | Old Regime | New Regime |
|---|---|---|---|
| Standard deduction | 16(ia) | ₹50,000 | ₹75,000 (higher!) |
| PPF, ELSS, EPF, LIC | 80C | ₹1.5L | Not available |
| Health insurance | 80D | ₹25K-1L | Not available |
| HRA exemption | 10(13A) | Varies | Not available |
| NPS extra deduction | 80CCD(1B) | ₹50,000 | Not available |
| Employer NPS | 80CCD(2) | 14% of Basic | 14% of Basic ✅ |
| Home loan (self-occupied) | 24(b) | ₹2L | Not available |
| Home loan (let-out) | 24(b) | No limit | No limit ✅ |
| Education loan interest | 80E | Full amount | Not available |
| LTA | 10(5) | Actual cost | Not available |
| Savings account interest | 80TTA | ₹10,000 | Not available |
The new regime keeps two valuable deductions: the higher ₹75,000 standard deduction (vs ₹50,000 in old) and employer NPS contribution under 80CCD(2). If your employer contributes to NPS, this benefit works in both regimes — a significant advantage. For the full impact on your retirement planning and wealth creation, see our NPS vs PPF vs EPF comparison. Understanding tax treatment is also critical for evaluating FD real returns, mutual fund returns after tax, and CAGR calculation.
The Decision Framework: Quick Guide
| Your Situation | Recommended Regime | Why |
|---|---|---|
| Salary ≤ ₹12.75L | New regime | Zero tax — no deductions needed |
| Salary ₹12.75-15L, few deductions | New regime | New regime tax is lower without heavy deductions |
| Salary ₹15L+, metro HRA + home loan + 80C | Calculate both | Old MAY win if total deductions exceed ₹5.44L |
| Salary ₹20L+, maximum deductions | New regime (usually) | Break-even requires ₹7L+ deductions — very rare |
| Freelancer / business income | Consult CA | Switching rules are stricter for business income |
| Senior citizen (60+) | Calculate both | Old regime gives higher exemption (₹3L/₹5L) |
| Don't want to invest for tax-saving | New regime | No forced investment in 80C instruments like ELSS, PPF |
The simplest advice: calculate your tax under both regimes using our Income Tax Calculator. You can switch every year at ITR filing as per CBDT guidelines. If in doubt, the new regime is the safer default — it requires no tax-planning effort and saves money for most salary levels. For financial planning and retirement, remember that the loss of 80C deduction doesn't mean you should stop investing — PPF, EPF, and SSY are excellent SEBI/government-backed instruments regardless of tax regime. The cost of delaying investment far exceeds any tax benefit lost. Continue SIP in equity mutual funds, use Step-Up SIP for growth, and plan your retirement corpus independently of tax-regime choice. Check salary hike vs inflation, compare gold vs FD vs equity, and see 7 strategies to beat inflation. Use our Inflation Calculator, Purchasing Power Calculator, SIP Calculator, Step-Up SIP Calculator, Lumpsum Calculator, and FIRE Calculator.