The biggest question every salaried employee faces after Budget 2025: old regime or new? The answer depends entirely on your deductions — and this calculator gives you a side-by-side comparison in seconds. Enter your salary, HRA, investments, and home loan details. The calculator applies the correct slabs for both regimes and tells you exactly how much you save.
What changed in FY 2025-26 (Budget 2025)
The new tax regime got significantly better this year:
| Change | FY 2024-25 | FY 2025-26 |
|---|---|---|
| Standard deduction | ₹50,000 | ₹75,000 |
| Zero-tax income limit | Up to ₹7 lakh (with rebate) | Up to ₹12 lakh (with rebate u/s 87A) |
| Basic exemption limit | ₹3 lakh | ₹3 lakh (unchanged) |
| Rebate u/s 87A | ₹25,000 (on income up to ₹7L) | ₹60,000 (on income up to ₹12L) |
The ₹12 lakh zero-tax threshold is the headline. But it applies only to the new regime — and only if your total taxable income (after the ₹75,000 standard deduction) is ₹12 lakh or below. For salaried income, that means gross CTC up to ~₹13.7 lakh = zero tax under the new regime.
New regime tax slabs (FY 2025-26)
| Income slab | Tax rate |
|---|---|
| Up to ₹3,00,000 | Nil |
| ₹3,00,001 – ₹7,00,000 | 5% |
| ₹7,00,001 – ₹10,00,000 | 10% |
| ₹10,00,001 – ₹12,00,000 | 15% |
| ₹12,00,001 – ₹15,00,000 | 20% |
| Above ₹15,00,000 | 30% |
Plus 4% health and education cess on the tax amount.
Old regime tax slabs (FY 2025-26)
| Income slab | Tax rate |
|---|---|
| Up to ₹2,50,000 | Nil |
| ₹2,50,001 – ₹5,00,000 | 5% |
| ₹5,00,001 – ₹10,00,000 | 20% |
| Above ₹10,00,000 | 30% |
The old regime allows deductions: standard deduction (₹50,000), HRA exemption, 80C (up to ₹1.5L), 80D, 80CCD(1B) for NPS (₹50,000), and Section 24(b) for home loan interest (up to ₹2L).
When does the old regime still win?
With the new regime’s improved slabs, most people below ₹12 lakh gross save more in the new regime. But the old regime can still be better if you have large deductions:
Old regime wins when you have:
- Home loan interest close to ₹2 lakh per year
- HRA exemption (renting in a metro city)
- Full 80C utilisation (₹1.5L) + NPS 80CCD(1B) (₹50K)
- 80D health insurance premiums
Rule of thumb: If your total deductions (excluding standard deduction) exceed ~₹3.75 lakh, the old regime likely saves more for income above ₹15 lakh. Use the calculator above for your exact numbers.
Worked example: ₹15 lakh salary, metro city
Inputs: ₹15L gross, HRA ₹1.8L, rent ₹2.4L, 80C ₹1.5L, NPS ₹50K, 80D ₹25K, home loan interest ₹1.5L.
| Old Regime | New Regime | |
|---|---|---|
| Gross salary | ₹15,00,000 | ₹15,00,000 |
| Standard deduction | ₹50,000 | ₹75,000 |
| HRA exemption | ₹72,000 | — |
| 80C + NPS + 80D | ₹2,25,000 | — |
| Home loan 24(b) | ₹1,50,000 | — |
| Taxable income | ₹10,03,000 | ₹14,25,000 |
| Tax + cess | ~₹1,25,912 | ~₹1,81,350 |
| Old regime saves | ₹55,438 | — |
With this deduction profile, the old regime saves ₹55,000+ per year at ₹15 lakh salary.
Can I switch regimes every year?
Salaried employees: Yes. You can choose your regime at the start of every financial year and inform your employer. You can switch back and forth freely each year.
Business income earners: No. Once you opt out of the new regime, you can only switch back once in a lifetime. For business/freelance income, the choice is largely permanent.
Frequently asked questions
Does the new regime affect my 80C investments?
You can still invest in PPF, ELSS, NPS, and life insurance under the new regime — you just don’t get a tax deduction for them. The investments and their returns remain the same; you’re only giving up the Section 80C deduction (up to ₹1.5L). If you’re investing for goals (retirement, child education), you should continue regardless of regime.
Is EPF contribution deductible under the new regime?
No. Under the new regime, there are no deductions except the standard deduction (₹75,000) and employer’s NPS contribution (Section 80CCD(2), up to 10% of salary). Your own EPF contribution is not deductible.
What about Section 24(b) home loan interest?
Not available under the new regime for self-occupied property. If you have a home loan, this is often the deciding factor — if your home loan interest is close to ₹2 lakh, run the numbers carefully.
What is the default regime for FY 2025-26?
New regime is the default. If you don’t inform your employer or file Form 10-IEA, the new regime is applied automatically. To claim old regime benefits, you must explicitly opt in before the end of the financial year.
Sources
- Finance Act 2025: Union Budget 2025-26 tax slab changes
- CBDT Circular on new regime default (FY 2024-25 onwards)
- Income Tax Act 1961: Sections 87A, 80C, 80D, 80CCD, 24(b), 10(13A)
- Income Tax Department: New vs Old Tax Regime comparison