Head to head
Old vs new tax regime
The new regime is now the default. It has lower slab rates and a bigger standard deduction (₹75,000). For a resident individual whose total income is at most ₹12 lakh, its 87A rebate can offset up to ₹60,000 of ordinary slab-rate tax — but not tax on special-rate income — and almost every exemption is gone.
The old regime taxes more on paper, but rewards you for 80C investments, 80D health premiums, HRA and home-loan interest. Whether it wins comes down to one question: how much do you actually claim?
Quick answer
Old vs new tax regime: If you claim serious deductions, the old regime often still wins. If you don't — which is most young earners — the new regime almost always leaves more in your hand and skips the paperwork. Don't guess: run your exact numbers through both.
| New regime | Old regime | |
|---|---|---|
| Standard deduction | ₹75,000 | ₹50,000 |
| 87A total-income threshold | ₹12L | ₹5L |
| 80C / 80D / HRA | Not allowed | Allowed |
| Home-loan interest | Not allowed (self-occupied) | Up to ₹2L |
| Slab rates | Lower | Higher |
| Best for | Few deductions | Heavy deductions |
Pick New regime if…
- You don't have big 80C/80D investments or rent to claim.
- You're early-career and prefer take-home over locking money in tax-savers.
- Your total income is at or below ₹12 lakh and is mostly ordinary slab-rate income.
Pick Old regime if…
- You max 80C (₹1.5L), pay health premiums, and claim HRA or home-loan interest.
- Your total deductions comfortably exceed ~₹3.5–4 lakh.
- You'd invest in ELSS/PPF anyway, so the lock-in isn't a sacrifice.
The verdict
If you claim serious deductions, the old regime often still wins. If you don't — which is most young earners — the new regime almost always leaves more in your hand and skips the paperwork. Don't guess: run your exact numbers through both.
Common questions
- Is income up to ₹12 lakh really tax-free in the new regime?
- For a resident individual in FY 2025-26, the rebate can offset up to ₹60,000 of ordinary slab-rate tax when total income is at most ₹12 lakh (about ₹12.75 lakh gross if salary is the only income). Special-rate income still counts toward ₹12 lakh, and its tax is not rebated. Marginal relief limits the initial jump on ordinary slab-rate income above ₹12 lakh.
- Can I switch between regimes?
- Salaried people without business income can choose afresh every year at filing. Those with business income face restrictions on switching back to the new regime once they opt out.