The new regime is simpler but removes most deductions. It wins if your total deductions (80C, HRA, LTA, home loan interest, etc.) are below roughly ₹3-4L depending on income. For most salaried employees with a home loan and full 80C investment, the old regime still wins.
Worked examples
Anjali, CTC ₹12L — FY 2025-26 comparison
Under the NEW regime (FY 2025-26): Taxable = ₹12L − ₹75K std. deduction = ₹11.25L. Slab tax = ₹0 (4L@0%) + ₹20K (4-8L@5%) + ₹42K (8-11.25L@10%) = ₹62K; since taxable ≤ ₹12L the ₹60K 87A rebate kicks in, leaving ₹2K + 4% cess ≈ ₹2,080 total. Under the OLD regime: Deductions = ₹50K std + ₹1.5L (80C) + ₹1.2L (HRA) + ₹2L (Sec 24 home loan) = ₹4.7L; taxable = ₹7.3L; slab tax ≈ ₹1.01L + 4% cess = ₹1.05L. Old regime costs ₹1.05L vs new regime ₹2,080 — NEW regime saves Anjali ₹1.04L at exactly ₹12L CTC. Once deductions push old-regime taxable below ₹5L (and its 87A rebate applies), old regime wins — roughly at ₹5L+ deductions for higher CTC earners.
Vikram, CTC ₹20L, home loan + full deductions
Vikram has ₹1.5L (80C) + ₹2L (Sec 24) + ₹50K (80CCD1B NPS) + ₹50K (80D) + ₹50K std. deduction = ₹4.5L deductions under old regime. Old-regime taxable = ₹15.5L; tax ≈ ₹2.63L + 4% cess ≈ ₹2.73L. New regime: taxable = ₹20L − ₹75K = ₹19.25L; tax ≈ ₹2.97L + 4% cess ≈ ₹3.09L. Old regime saves Vikram ₹36,000/yr. At ₹20L+ CTC, high deductions still favour the old regime.
Frequently asked questions
Which is better — old or new tax regime in 2025-26?
In FY 2025-26 the new regime has a ₹12L rebate — meaning zero tax if taxable income is ≤ ₹12L. For incomes just above that, old regime with ₹3.5L+ deductions often still wins. Use the calculator for your exact figure.
Can salaried employees choose between old and new regime?
Yes. Salaried employees can declare their preferred regime to their employer at the start of the financial year. They can also switch when filing ITR.
What is the rebate limit in the new regime for FY 2025-26?
The Section 87A rebate under the new regime is ₹60,000 for FY 2025-26, applicable if total taxable income is up to ₹12L. Combined with the ₹75K standard deduction, salaried employees with CTC up to ₹12.75L can have zero tax under the new regime.
What deductions are NOT available in the new regime?
80C (PPF/ELSS/LIC), 80D (health insurance), HRA exemption, Sec 24 home loan interest, LTA, and most other deductions are not available. Only the ₹75K standard deduction and 80CCD(2) employer NPS contribution apply.