Old vs new tax regime: a practical way to decide for FY 2025-26
How to decide in one step
Add up the deductions you actually claim: 80C (up to ₹1.5 lakh), employer NPS, home-loan interest (up to ₹2 lakh), HRA and health insurance under 80D. If that total is high, the old regime likely wins; if you claim little, the new regime almost always does.
Where the old regime still wins
- You have a home loan with significant interest.
- You pay rent and claim a meaningful HRA exemption.
- You max out 80C plus NPS and 80D.
Where the new regime wins
- You're early-career with few investments or no home loan.
- You prefer simplicity over tracking proofs.
- Your deductions are below the breakeven for your income.
Don't decide on rates alone
The regime is an annual choice for most salaried taxpayers, but it interacts with capital gains, business income and arrears. Run both computations on your actual numbers before filing — a wrong pick can cost thousands.
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Reviewed by Abhishek Kumar. General information, not individual tax advice — rules change, so confirm current rules for your situation before acting.