The new tax regime has lower rates but almost no deductions. The old regime has higher rates but lets you claim HRA, 80C, health insurance, home loan interest and more. Which is cheaper depends on how much you can claim. Compare both instantly:
The break-even point
This is roughly how much you need to claim in deductions (on top of the standard deduction) before the old regime costs the same as the new one, for a salaried person below 60:
| Yearly salary | Tax under new regime | Deductions needed for old regime to match |
|---|---|---|
| ₹10 lakh | ₹0 | about ₹4.5 lakh |
| ₹15 lakh | ₹97,500 | about ₹5.45 lakh |
| ₹20 lakh | ₹1,92,400 | about ₹7.1 lakh |
| ₹25 lakh and above | ₹3,19,800 at ₹25 lakh | about ₹8 lakh |
Who may still be better off in the old regime
- People paying high rent in a big city with a large HRA. Check yours with the HRA calculator.
- People with a home loan who can claim up to ₹2 lakh of interest, plus principal under 80C.
- People who already use the full 80C limit, health insurance for themselves and their parents, and NPS.
For most salaried people with few deductions, the new regime is now cheaper, and it is the default if you do not choose.
Frequently asked questions
Can I switch regimes every year?
Salaried people without business income can choose each year when filing their return. People with business income have limited chances to switch.
Do the section numbers like 80C still apply?
The Income-tax Act, 2025 renumbers many sections. This guide uses the familiar names because most people and payslips still use them; the deductions themselves are what matter for the comparison.
An estimate based on the site’s tax calculator; confirm with a tax professional before filing. Related: Income tax on common salaries