New vs Old Tax Regime AY 2025-26 — Which Saves More Tax?

Compare new and old income tax regimes for AY 2025-26. Slab rates, standard deduction, HRA, 80C deductions — find out which option saves more for your income level.

New Tax Regime Slabs (AY 2025-26)

Under Section 115BAC, the new regime is default from AY 2024-25. Standard deduction of ₹75,000 available for salaried employees from AY 2025-26 (Budget 2024). Nil tax on income up to ₹3L; 5% up to ₹7L (with rebate u/s 87A making it zero); 10% up to ₹10L; 15% up to ₹12L; 20% up to ₹15L; 30% above ₹15L.

Old Regime — When It Wins

Opt for the old regime if your deductions exceed ₹4-5 lakh. Key deductions: 80C (₹1.5L), 80D (₹25K-₹50K), HRA, home loan interest u/s 24(b) (₹2L), standard deduction (₹50K), NPS u/s 80CCD(1B) (₹50K additional).

Break-even Analysis

For income of ₹10 lakh: new regime results in approximately ₹65,000 tax. Old regime with ₹3.5L deductions gives similar result. If your deductions exceed ₹3.5L, old regime saves more tax at ₹10L income.

Deductions Not Available Under New Regime

The new tax regime disallows Section 80C (PPF, ELSS, insurance), Section 80D (health insurance), Section 24(b) (home loan interest), HRA exemption, LTA, professional tax deduction, and most Chapter VI-A deductions. Only standard deduction of ₹75,000 (salaried) and employer NPS contribution (Section 80CCD(2)) are allowed.

When Should You Choose New Regime?

Choose the new regime if your total deductions are below ₹3.5 lakh for income up to ₹10 lakh, or below ₹4.75 lakh for income up to ₹15 lakh. Also prefer new regime if you are a young earner without home loan or significant insurance commitments.

How to Switch Regimes

Salaried employees: Inform your employer at the start of the year. You can switch again while filing ITR. Business owners: File Form 10-IEA to opt out of the new regime. Note — once you switch from new to old regime as a business owner, switching back is not allowed.

FilingPro Tax Advisory

Our team runs a detailed old vs new regime comparison for every client before filing. We analyse your Form 16, AIS, investment proofs and projected deductions to determine which option saves more. Call 9566-068-468 for a free tax planning consultation — we serve salaried employees, business owners and NRIs across Chennai.