The Indian tax system underwent significant changes with the introduction of the New Tax Regime in 2020. For FY 2025-26, the New Regime has been further simplified with revised tax slabs. This guide helps you compare both regimes and choose the one that minimizes your tax liability.
New Tax Regime FY 2025-26 Slabs
- •Up to ₹4,00,000: Nil
- •₹4,00,001 to ₹8,00,000: 5%
- •₹8,00,001 to ₹12,00,000: 10%
- •₹12,00,001 to ₹16,00,000: 15%
- •₹16,00,001 to ₹20,00,000: 20%
- •Above ₹20,00,000: 30%
Rebate under Section 87A: No tax if income up to ₹12,00,000.
Old Tax Regime Slabs
- •Up to ₹2,50,000: Nil
- •₹2,50,001 to ₹5,00,000: 5%
- •₹5,00,001 to ₹10,00,000: 20%
- •Above ₹10,00,000: 30%
Rebate under Section 87A: No tax if income up to ₹5,00,000.
Which One to Choose?
The New Regime is better if you have limited investments and deductions. The Old Regime is better if you maximize deductions under 80C, 80D, HRA, and other exemptions.
Use our Income Tax Calculator to compare both regimes instantly with your specific income and deductions. You can also check your Salary Calculator to see how tax regime choice affects your in-hand salary.
Tax-Saving Investments Under Old Regime
Section 80C: Up to ₹1.5 lakh deduction for PPF, EPF, ELSS, NSC, tax-saving FDs, life insurance
Section 80D: Health insurance premium deduction up to ₹25,000 (₹50,000 for senior citizens)
Section 24(b): Home loan interest deduction up to ₹2 lakh
HRA: House Rent Allowance exemption for salaried employees
Verdict
For most salaried employees with taxable income between ₹8-20 lakh, the New Regime is simpler and often more beneficial. Use our calculator to determine your optimal choice.
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Written by
Rahul Sharma