Old vs New Tax Regime FY 2025-26 â Which Saves More? (â¹12L Rebate Calculator)
Last verified: April 2026, against the Finance Act 2025 and the Income Tax Department’s FY 2025-26 slab notification. Always verify your specific case with a CA or the official portal before filing.
Budget 2025 didn’t just tweak the new tax regime â it changed the math entirely. The Section 87A rebate now wipes out tax up to â¹12 lakh of taxable income (â¹12.75 lakh gross for salaried, after the â¹75,000 standard deduction). That single change has pushed the new regime ahead for most salaried Indians earning under roughly â¹15 lakh, even ignoring 80C and HRA. But “most” is doing heavy lifting in that sentence â there are still clear cases where the old regime wins by â¹50,000+ a year.
This guide gives you the slab tables, a side-by-side calculator, and worked examples at â¹6 L / â¹10 L / â¹15 L / â¹25 L / â¹50 L. By the end you’ll know exactly which regime to pick when you file your FY 2025-26 ITR (filing window: April â July 2026).
The 30-second answer
- Income up to â¹12.75 L (gross, salaried): New regime â zero tax, full stop. Old regime can’t beat zero.
- â¹12.75 L â â¹15 L: New regime usually wins unless your 80C + 80D + HRA + home-loan interest deductions cross ~â¹3.5 L combined.
- â¹15 L â â¹25 L: Toss-up. Old regime wins if you actually claim â¹4 L+ of deductions; new regime wins if you don’t.
- Above â¹25 L: New regime ahead for most because the marginal rate caps at 30% only above â¹24 L (versus â¹10 L in the old regime).
- Have a home loan with â¹2 L+ interest, full HRA exemption, and max 80C/80D? Old regime probably still wins regardless of income.
Run your own numbers in the Income Tax Calculator â it covers both regimes side by side.
FY 2025-26 new regime slabs (with â¹12 L rebate)
| Taxable income slab | Tax rate |
|---|---|
| Up to â¹4,00,000 | 0% |
| â¹4,00,001 â â¹8,00,000 | 5% |
| â¹8,00,001 â â¹12,00,000 | 10% |
| â¹12,00,001 â â¹16,00,000 | 15% |
| â¹16,00,001 â â¹20,00,000 | 20% |
| â¹20,00,001 â â¹24,00,000 | 25% |
| Above â¹24,00,000 | 30% |
Standard deduction: â¹75,000 (salaried + pensioners only).
Section 87A rebate: Tax payable on income up to â¹12,00,000 is fully rebated â meaning you pay zero tax up to that taxable income level. Beyond â¹12 L, the rebate phases out via the marginal-relief mechanism so you never pay more tax than the income that exceeds â¹12 L.
Allowed in the new regime: standard deduction (â¹75K), employer’s NPS contribution under 80CCD(2), transport allowance for disabled employees, and the family pension deduction. Not allowed: 80C, 80D, HRA exemption, LTA, home-loan interest on self-occupied property (Sec 24b), and most of Chapter VI-A.
FY 2025-26 old regime slabs (unchanged)
| Taxable income slab | Tax rate |
|---|---|
| Up to â¹2,50,000 | 0% |
| â¹2,50,001 â â¹5,00,000 | 5% |
| â¹5,00,001 â â¹10,00,000 | 20% |
| Above â¹10,00,000 | 30% |
Standard deduction: â¹50,000 (salaried).
Section 87A rebate: Up to â¹12,500 (income up to â¹5 L taxable).
Allowed: Section 80C up to â¹1.5 L, 80CCD(1B) â¹50K NPS, 80D health insurance, HRA exemption, LTA, home-loan interest (â¹2 L self-occupied, unlimited let-out â capped at â¹2 L set-off against other heads), education loan interest (80E), and the long Chapter VI-A list.
4% Health & Education Cess applies on the tax in both regimes. Surcharge starts at â¹50 L taxable income in both.
Side-by-side calculator (paste your numbers)
The widget below is the same engine that powers our full Income Tax Calculator â strip your numbers in and see both regimes calculated in real time.
Worked examples â six income levels
1. Gross salary â¹6,00,000
Old regime: Salary â¹6 L â standard deduction â¹50K â 80C (assume â¹1.5 L PPF/ELSS) = â¹4 L taxable. Tax = 5% on (â¹4 L â â¹2.5 L) = â¹7,500. Section 87A rebate wipes it. Tax payable: â¹0.
New regime: Salary â¹6 L â standard deduction â¹75K = â¹5.25 L taxable. Tax = 5% on (â¹5.25 L â â¹4 L) = â¹6,250. 87A rebate wipes it. Tax payable: â¹0.
Verdict: Tie at zero. New regime saves you the hassle of locking â¹1.5 L into 80C investments to get there.
2. Gross salary â¹10,00,000
Old regime (with â¹2 L deductions: â¹1.5 L 80C + â¹25K 80D + â¹25K HRA balance): Taxable â¹10 L â â¹50K SD â â¹2 L = â¹7.5 L. Tax = â¹12,500 + 20% Ã â¹2.5 L = â¹62,500. + 4% cess = â¹65,000.
New regime: Taxable â¹10 L â â¹75K = â¹9.25 L. Tax under slabs â â¹32,500. 87A rebate covers it. Tax payable: â¹0.
Verdict: New regime saves â¹65,000. Even if the person could push old-regime deductions to â¹3 L, new regime still wins.
3. Gross salary â¹15,00,000
Old regime (â¹3.5 L deductions: â¹1.5 L 80C + â¹50K NPS + â¹50K 80D + â¹1 L HRA): Taxable â¹15 L â â¹50K SD â â¹3.5 L = â¹11 L. Tax = â¹12,500 + â¹1 L + 30% Ã â¹1 L = â¹1,42,500 + 4% cess = â¹1,48,200.
New regime: Taxable â¹15 L â â¹75K = â¹14.25 L. Tax = 5% Ã â¹4 L + 10% Ã â¹4 L + 15% Ã â¹2.25 L = â¹20K + â¹40K + â¹33,750 = â¹93,750 + 4% cess = â¹97,500.
Verdict: New regime saves â¹50,700. The breakeven for this income tier sits around â¹4.5 L of old-regime deductions.
4. Gross salary â¹15 L with maxed-out home-loan interest
Same income, but assume â¹2 L Sec 24b interest + â¹3.5 L other deductions = â¹5.5 L total.
Old regime: Taxable â¹15 L â â¹50K â â¹5.5 L = â¹9 L. Tax = â¹12,500 + 20% Ã â¹4 L = â¹92,500 + cess = â¹96,200.
New regime: Same as above = â¹97,500.
Verdict: Old regime edges ahead by â¹1,300 â a near tie. Anyone in this profile should run their actual numbers in the Income Tax Calculator; HRA and home-loan interest can swing it either way.
5. Gross salary â¹25,00,000
Old regime (â¹4 L deductions, no home loan): Taxable â¹25 L â â¹50K â â¹4 L = â¹20.5 L. Tax = â¹12,500 + â¹1 L + 30% Ã â¹10.5 L = â¹4,27,500 + cess = â¹4,44,600.
New regime: Taxable â¹25 L â â¹75K = â¹24.25 L. Tax = 5% Ã â¹4L + 10% Ã â¹4L + 15% Ã â¹4L + 20% Ã â¹4L + 25% Ã â¹4L + 30% Ã â¹0.25L = â¹20K + â¹40K + â¹60K + â¹80K + â¹1L + â¹7,500 = â¹3,07,500 + cess = â¹3,19,800.
Verdict: New regime saves â¹1,24,800/year â a runaway win. To reverse this, old-regime deductions would need to push past â¹8 L combined, which is unrealistic without a serious home-loan interest claim.
6. Gross salary â¹50,00,000
Old regime (â¹5 L deductions including â¹2 L home loan): Taxable â¹44.5 L. Tax â â¹11.6 L + 10% surcharge + cess = ~â¹13.3 L.
New regime: Taxable â¹49.25 L. Tax â â¹11.5 L + 10% surcharge + cess = ~â¹13.2 L.
Verdict: Effective tie. At this income, the regime decision should pivot on whether you’re already maxing out 80C investments by habit (PPF/ELSS) â if yes, stay old; if you’d rather have liquidity, switch new.
The income breakeven, in one chart
Crude rule of thumb for FY 2025-26 (assuming standard deduction in both regimes):
| Gross income | Deductions you’d need in old regime to match new regime |
|---|---|
| â¹10 L | ~â¹3.0 L (impossible without HRA + home loan + maxed 80C/80D) |
| â¹12.75 L | ~â¹4.5 L |
| â¹15 L | ~â¹4.4 L |
| â¹20 L | ~â¹4.0 L |
| â¹25 L | ~â¹8.0 L (very rare) |
| â¹50 L | ~â¹4.5 L |
If your realistic deductions don’t hit those numbers â and for most salaried people they don’t â the new regime wins.
The five mistakes people make picking a regime
- Counting 80C deductions you don’t actually make. A lot of people assume “I’ll do â¹1.5 L PPF + â¹50K NPS” but never get around to it. Old regime only saves you tax on what you actually invest.
- Forgetting the â¹75K vs â¹50K standard-deduction gap. The new regime gives â¹25K more standard deduction by default â that alone is worth ~â¹5K-7.5K in tax depending on slab.
- Ignoring HRA correctly. If you live in a metro and pay â¹30K+ rent, your HRA exemption can easily be â¹2-3 L per year. That’s a serious old-regime advantage. See our HRA rules guide.
- Double-counting NPS benefit. The â¹50K Section 80CCD(1B) deduction works only in the old regime. The 80CCD(2) employer-NPS-contribution deduction works in both. Don’t conflate them. See NPS Tier 1 vs Tier 2.
- Locking in for life. Salaried people can switch regimes every financial year. Self-employed taxpayers get one switch in a lifetime â and once they switch back to new from old, they can switch to old only one more time.
How to actually choose: a 3-step process
Step 1 â list your real deductions. Honestly add up what you’ll claim this year: 80C contributions you’ll actually make, 80D premiums you actually pay, HRA you can document with rent receipts and a PAN of the landlord (mandatory above â¹1 L annual rent), home-loan interest from your latest provisional certificate.
Step 2 â run both regimes in the calculator. Plug the same gross income into the Income Tax Calculator with and without your deductions list. Note both tax payables.
Step 3 â pick the lower-tax one and tell your employer in April. Your TDS for the year is calculated based on the regime declared to your employer at the start of the financial year. You can still change regime when you file the return, but mismatch creates refund/demand cycles. Get it right at declaration time.
Linked deep-dives on related topics
- Section 80C investments ranked â PPF vs ELSS vs NPS vs tax-saving FD
- HRA Calculator & rules â how much rent allowance is tax-free
- Take-home salary calculator â CTC to in-hand pay
- Capital gains tax on stocks & mutual funds â STCG vs LTCG
- Income Tax Calculator
FAQs
Is the â¹12 lakh tax-free limit available to everyone?
Only resident individual taxpayers under the new regime â and only on income other than special-rate income (capital gains, lottery). Salaried people effectively get â¹12.75 L tax-free because of the additional â¹75K standard deduction.
Can I claim HRA in the new tax regime?
No. HRA exemption under Section 10(13A) is not allowed in the new regime. If you’re paying high rent in a metro, run the math both ways â the HRA exemption alone can be worth â¹50K-1.5 L of tax in the old regime.
What is marginal relief at â¹12 lakh?
If your taxable income just crosses â¹12 L (say â¹12.10 L), you don’t suddenly pay â¹61,500 of tax on the entire amount. Marginal relief caps your tax at the amount of income exceeding â¹12 L. So at â¹12.10 L taxable, your tax is roughly â¹10,000 (4% cess on top), not â¹61,500.
Can I switch tax regimes every year?
Salaried individuals â yes, every financial year. Business and professional income earners â only once in a lifetime to opt out of the new regime, then once more to come back, then it’s permanent.
Which regime is better for senior citizens?
Senior citizens (60+) and super seniors (80+) lose their higher basic exemption (â¹3 L / â¹5 L) advantage in the new regime â everyone gets â¹4 L. They also can’t claim Section 80TTB (â¹50K interest deduction). For seniors with significant FD/SCSS interest income, old regime usually still wins.
Is the new regime mandatory?
It’s the default if you don’t actively opt for old. You have to file Form 10-IEA to opt for the old regime if you have business income; salaried individuals indicate the choice in the ITR form itself.
Sources & references
- Income Tax Department â official portal (slab tables and Form 10-IEA)
- Union Budget 2025 â Finance Bill
- CBDT Circular No. 2/2025 (clarifying â¹12 L 87A rebate operation)
- Press Information Bureau release dated 1 February 2025
Last verified: April 2026. Tax law changes after every Union Budget â we re-verify this article in February each year. If the figures here don’t match the current notification, please report it via our contact page.
