Every tax season brings the same question: old regime or new regime? The honest answer is that there's no universal right answer — it depends entirely on how many deductions you actually claim, and the only reliable way to know is to calculate both and compare.
What each regime actually offers
The old regime has higher tax rates but allows a long list of deductions and exemptions — Section 80C investments (up to ₹1.5 lakh), Section 80D health insurance premiums (up to ₹1 lakh), HRA exemption, a ₹50,000 standard deduction for salaried employees, and more. If you have significant deductions to claim, the old regime's higher headline rate can still work out cheaper after they're all applied.
The new regime has lower tax rates and a wider 0% slab, but strips out almost all of those deductions — you mainly just get a standard deduction if you're salaried (₹75,000 currently). It's simpler, and if you don't have much to deduct in the first place, the lower rates usually win on their own.
A quirk worth knowing: the rebate cliff vs. marginal relief
Both regimes offer a rebate under Section 87A that zeroes out your tax entirely below a certain income threshold. But they behave differently right at that edge. The old regime's rebate is a hard cliff at ₹5 lakh taxable income — earn one rupee over it, and you lose the entire rebate at once, not just tax on that one extra rupee. The new regime's rebate has marginal relief built in — crossing its threshold by a small amount never costs you more tax than that small amount itself. It's a real, often-criticized asymmetry between the two systems, not a calculation error if you see it in a comparison.
The new regime's thresholds keep moving
Unlike the old regime's slabs, which have stayed the same for years, the new regime's slabs and rebate threshold have changed between recent financial years — the rebate threshold alone moved from ₹7 lakh to ₹12 lakh between FY 2024-25 and FY 2025-26. Whatever comparison you're looking at needs to be for the correct financial year, since an old chart floating around online may already be out of date.
Why you can't just eyeball this
Both regimes also apply a 4% health and education cess on top of the calculated tax, and a surcharge kicks in above ₹50 lakh income (capped at a lower maximum rate under the new regime than the old). Between the different slabs, different deduction rules, the rebate cliff-vs-relief asymmetry, and the surcharge, there are too many moving parts to reliably compare by hand — small differences in your inputs can flip which regime wins.
Using the tool
Our Income Tax Calculator runs your income and deductions through both regimes for the financial year you select, and tells you directly which one results in less tax and by how much — so the decision is based on your actual numbers, not a general rule of thumb.
Try it here: Income Tax Calculator.