Old vs New Tax Regime: Which Saves You More?

What changed with the new regime

The new regime offers a wider set of tax slabs with a higher basic exemption, in exchange for giving up most deductions. For FY 2025-26, the new regime has no tax up to ₹4,00,000 in taxable income, and a full rebate under Section 87A that brings tax to zero for taxable income up to ₹12,00,000 — plus a ₹75,000 standard deduction for salaried taxpayers, which effectively pushes the tax-free threshold to roughly ₹12.75 lakh of gross salary.

The old regime keeps the lower ₹2,50,000 exemption threshold and a ₹5,00,000 rebate ceiling, but allows deductions the new regime doesn't: Section 80C (up to ₹1,50,000 — PPF, ELSS, life insurance, EPF), Section 80D (health insurance premiums), HRA exemption, home loan interest, and several others.

Slab comparison at a glance

Both regimes add 4% Health & Education Cess on the tax computed above, after applying the Section 87A rebate (full rebate up to ₹12,00,000 taxable income under the new regime, ₹5,00,000 under the old regime). Figures exclude surcharge, which applies only above ₹50 lakh income.

So which one actually wins?

It comes down to how much you can claim under the old regime. As a rough rule of thumb: if your combined 80C + 80D + HRA + other deductions add up to less than roughly ₹2-2.5 lakh a year, the new regime usually comes out ahead because of its lower rates and higher exemption. If you have a home loan, pay meaningful rent with HRA in your salary structure, and max out 80C, the old regime can still win — but the gap has narrowed significantly since the new regime became more generous.

The only reliable way to know is to compute both for your actual numbers. The Income Tax Calculator on this site does exactly that — enter your gross income and old-regime deductions once, and it shows both regimes side by side with a direct verdict on which saves you more.