New vs Old Tax Regime 2025-26 — Which Saves More?
Tax Planning New vs Old Tax Regime 2025-26 — Which Saves More Tax? By CalcBharat.com Finance Team · April 2026 · 10 min read
Since Budget 2020, Indian taxpayers must choose between two tax regimes every year. This guide gives you worked examples for different salary levels.
📌 Use our Income Tax Calculator — select “Compare Both” to see New vs Old side by side.
Key Differences
| Feature | New Regime | Old Regime |
Standard Deduction75,00050,000 |
Section 80CNot allowedUp to 1.5 lakh |
HRA ExemptionNot allowedAllowed |
Home Loan InterestNot allowedUp to 2 lakh |
87A Rebate60,000 (up to 12L income = zero tax)12,500 (up to 5L) |
At 12 Lakh Salary — New Regime = Zero Tax
Under New Regime: After Rs 75,000 standard deduction, taxable income is Rs 11.25 lakh. Tax = Rs 60,000 — fully offset by 87A rebate. Effective tax = Rs 0.
Under Old Regime with full deductions (80C + HRA): Tax = approx Rs 1.13 lakh. New Regime wins by over a lakh.
At 20 Lakh Salary — Old Regime May Win
With maximum deductions (80C + HRA + home loan + 80D + NPS = Rs 5.25 lakh total): Old Regime tax = Rs 2.93 lakh vs New Regime Rs 3.52 lakh. Old Regime saves Rs 58,500.
Choose New Regime If
Income below Rs 12 lakh (zero tax), limited deductions, young professionals, or if you prefer simplicity.
Choose Old Regime If
Income above Rs 15L with home loan + HRA + full 80C + elderly parents (80D). Total deductions must exceed Rs 3.75 lakh to make Old Regime worthwhile.
👨💼CalcBharat.com Finance TeamTax Planning ExpertsBased on FY 2025-26 tax slabs. Consult a CA for personalized advice. Last updated: April 2026.
Frequently Asked Questions
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Calculate Your Tax Both WaysFrequently Asked Questions
New Regime — your tax is zero. The ₹12.75L rebate (₹12L limit + ₹75,000 standard deduction) means nil tax. Under the old regime, you’d need ₹3.5L+ in 80C/HRA/80D deductions to match that. Most people at ₹12L don’t have that many deductions.
Old Regime if you fully load deductions: 80C ₹1.5L + NPS ₹50K + HRA ₹1.5L + home loan interest ₹2L + 80D ₹25K = ₹5.75L in deductions. This can save ₹40,000–60,000 more versus new regime. Without a home loan and HRA, new regime usually wins.
Yes — salaried employees can switch at ITR filing time each year. If you have business income, you get one switch from old to new (not back). Best practice: calculate your exact tax under both regimes every March using your final deduction amounts, then declare to your employer.
80C (PPF, ELSS, LIC), 80D (health insurance premium), HRA exemption, home loan interest under Section 24(b), LTA, and professional tax exemption. Standard deduction of ₹75,000 is still available. Employer NPS contribution (80CCD(2)) is also still deductible.
Yes, but only for employer’s NPS contribution (80CCD(2)) — this is worth claiming regardless of regime. Employee’s own NPS contribution (80CCD(1B), up to ₹50,000) is only deductible under the old regime. If your employer offers NPS, ensure they’re contributing.