How New Tax Regime works
For 2025-26, income up to ₹4,00,000 is nil, then 5%, 10%, 15%, 20%, 25% and 30% on higher slabs, with a ₹75,000 standard deduction and a rebate that brings tax to zero on taxable income up to ₹12,00,000. It does not allow HRA, 80C or most other deductions.
Why New Tax Regime matters
The new regime is the default, so most salaried people are taxed under it unless they opt for the old regime; the rebate makes it very attractive up to about ₹12 lakh.
New regime versus old regime
The choice between regimes comes down to your deductions. The old regime charges higher slab rates but lets you claim HRA, home-loan interest, and up to ₹1,50,000 under Section 80C, so it can win for someone paying big rent or a home loan. The new regime charges lower rates and adds a generous rebate but disallows almost all of those exemptions, so it usually wins for younger workers and those with few investments. A quick way to decide is to compute the tax both ways on your salary and pick the lower figure, which you are allowed to do each year at the time of filing.
Frequently asked questions
Is the new tax regime better than the old one?
It depends. The new regime suits those with few deductions; the old regime can win if you claim large HRA, home-loan interest and 80C investments.
Can I switch between regimes?
Salaried people can choose the regime each year at the time of filing, so you can compare both and pick the lower tax.