Is the old or new tax regime better for FY 2025-26?

It depends on your deductions. Under the new regime, income up to Rs 12 lakh is effectively tax-free (Rs 12.75 lakh for salaried after the Rs 75,000 standard deduction) thanks to the Section 87A rebate. The new regime usually wins unless your total deductions (80C, 80D, HRA, home loan interest) exceed roughly Rs 3.75-4.25 lakh, in which case the old regime can be cheaper.

Which regime is the default in FY 2025-26?

The new tax regime is the default. If you want the old regime you must actively opt for it. Salaried taxpayers can switch between regimes every year; taxpayers with business income can switch back to the old regime only once in their lifetime.

Can I claim 80C and HRA in the new tax regime?

No. The new regime does not allow most common deductions such as Section 80C, 80D, HRA exemption or home loan interest on a self-occupied house. It only allows the Rs 75,000 standard deduction and the employer's NPS contribution under 80CCD(2). These deductions remain available only under the old regime.

What income is tax-free under the new regime?

For FY 2025-26, a resident individual pays zero tax on total income up to Rs 12 lakh because of the enhanced Section 87A rebate. A salaried person effectively pays no tax up to Rs 12.75 lakh after the Rs 75,000 standard deduction.

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Old vs New Tax Regime FY 2025-26: Which Should You Choose?

A number-first comparison of both regimes, with slab tables, allowed deductions and the break-even point

Built & reviewed by Ankit Madia

Updated Jan 2025