Old vs new tax regime in India
The new regime has lower rates and almost no deductions; the old has higher rates and allows them. How to tell which is cheaper for you, and why the answer changed after 2025.
Compare both on your own figuresThe trade
The new regime charges lower rates across wider slabs but allows almost no deductions - no 80C, no HRA exemption, no home loan interest on a let-out property. The old regime charges more but lets you deduct.
That was a genuine trade-off until 2025. It largely stopped being one when the section 87A rebate was raised: a resident individual with taxable income up to ₹12,00,000 now pays nothing at all under the new regime, and with the ₹75,000 standard deduction that covers a salary of ₹12,75,000.
Where the old regime still wins
It needs two things together: an income high enough to be well past the rebate, and deductions large enough to outweigh the wider new-regime slabs. The new regime's 30% band starts at ₹24,00,000; the old regime's starts at ₹10,00,000, so the old regime is charging 30% on a large stretch of income the new one charges 15% or 20% on.
In practice that means a salary comfortably into seven figures combined with a full 80C, substantial HRA, home loan interest and health insurance. If your deductions total less than about a third of your income, the new regime almost certainly wins.
Do not guess at it
The interaction between the rebate, the slabs and your deductions is not something to reason about in the abstract - the crossover moves with all three. The calculator computes both regimes on the same figures every time and names the cheaper one, which takes a few seconds and settles it.
One thing that surprises people near ₹12 lakh
Marginal relief caps the income tax at the amount by which your income exceeds ₹12,00,000, so crossing the threshold does not cost you ₹60,000. But the 4% health and education cess is then charged on that capped figure, so your net income just above the threshold is very slightly below what it would be at exactly ₹12,00,000 - by the cess on the excess, and no more.
That is what the law does, not a rounding error. It is worth knowing if you have any control over the timing of income near that line.