New vs Old Tax Regime for FY 2025-26 (AY 2026-27): Which Is Better?
Short answer: For FY 2025-26 (the year you report in your AY 2026-27 return), the new regime is better for most salaried people. Gross salary up to about ₹12.75 lakh pays no tax, because of the ₹60,000 rebate and ₹75,000 standard deduction. The old regime wins only if your deductions are large: at ₹15 lakh you need about ₹5,45,000, and at ₹20 lakh about ₹7,10,000.
Which year does this cover?
FY 2025-26 is the year from 1 April 2025 to 31 March 2026. The income you earned in it is reported in the return for assessment year (AY) 2026-27. That return is still filed under the old Income-tax Act, 1961. If you are looking for the current year, read our guide on FY 2026-27. The slabs are the same in both years, because the Union Budget 2026 made no change to them.
The two regimes for FY 2025-26
New regime (the default): nil tax up to ₹4 lakh, then 5% (₹4–8 lakh), 10% (₹8–12 lakh), 15% (₹12–16 lakh), 20% (₹16–20 lakh), 25% (₹20–24 lakh) and 30% above ₹24 lakh. Salaried people get a ₹75,000 standard deduction, and a rebate of up to ₹60,000 makes tax zero when taxable income is up to ₹12 lakh.
Old regime: nil up to ₹2.5 lakh, then 5%, 20% and 30%, a ₹50,000 standard deduction, and deductions such as 80C, 80D, HRA and home loan interest. The rebate covers taxable income up to ₹5 lakh.
How much less tax than FY 2024-25?
The new regime changed a lot in FY 2025-26. In FY 2024-25 the slabs started at ₹3 lakh, the rebate covered taxable income only up to ₹7 lakh, and the top 30% rate began at ₹15 lakh. Here is the new-regime tax at different salaries in both years (salaried, below 60, 4% cess included, no surcharge):
| Yearly salary | FY 2024-25 tax | FY 2025-26 tax | Difference |
|---|---|---|---|
| ₹8 lakh | ₹23,400 | ₹0 | ₹23,400 |
| ₹10 lakh | ₹44,200 | ₹0 | ₹44,200 |
| ₹12 lakh | ₹71,500 | ₹0 | ₹71,500 |
| ₹15 lakh | ₹1,30,000 | ₹97,500 | ₹32,500 |
| ₹20 lakh | ₹2,78,200 | ₹1,92,400 | ₹85,800 |
| ₹25 lakh | ₹4,34,200 | ₹3,19,800 | ₹1,14,400 |
The FY 2024-25 column uses the rules as we understand them, and the FY 2025-26 column comes from our FY 2025-26 income tax calculator. A negative difference is the extra tax you paid in the earlier year. Near the rebate limits, marginal relief can lower the tax, and these figures do not include it.
Old regime vs new regime in FY 2025-26
- Up to about ₹12.75 lakh: the new regime is nil, so it wins.
- At ₹15 lakh: the new regime costs ₹97,500. The old regime with ₹1.5 lakh of deductions costs ₹2,10,600. You need about ₹5,45,000 of deductions for the old regime to match.
- At ₹20 lakh: the break-even is about ₹7,10,000 of deductions.
Count only what you really have: EPF, Section 80C, HRA (check it with the HRA calculator), health insurance and home loan interest.
I have not filed my FY 2025-26 return yet. What now?
The usual due date for salaried people has passed. You can generally still file a belated return with a late fee, and the old-regime or new-regime choice is made in that return. Check the current last date and fee on the Income Tax e-filing portal, and do not wait, because interest and penalties can build up.
Keep reading
- Section 80C Explained: What You Can Claim Up to ₹1.5 Lakh — Income tax, 6 min read
- Old vs New Tax Regime FY 2026-27: Which Saves You More Tax? — Income tax, 7 min read
- CTC vs In-Hand Salary: Why Your Take-Home Is Less Than Your CTC — Salary and tax, 6 min read
- EPF Interest Rate 8.25%: History, Calculation and What It Means — EPF and retirement, 6 min read
Frequently asked questions
Is the new tax regime better for FY 2025-26?
For most salaried people, yes. Up to about ₹12.75 lakh of gross salary there is no tax. The old regime wins only if your deductions are large, such as 80C, HRA and home loan interest together.
What changed in the new regime from FY 2024-25 to FY 2025-26?
The slabs widened to start at ₹4 lakh, the rebate limit rose from ₹7 lakh to ₹12 lakh of taxable income, the rebate cap rose to ₹60,000, and the 30% rate moved from ₹15 lakh to above ₹24 lakh.
Are FY 2025-26 and FY 2026-27 slabs the same?
Yes. The Union Budget 2026 did not change the slabs, so the same new-regime slabs apply in both years.
Can I still choose the old regime for FY 2025-26?
Salaried individuals without business income can choose the regime when they file their return. Check the e-filing portal for the options available to you.
Sources: Income Tax Department — tax rates and slabs · Income Tax e-filing portal · ClearTax — income tax slabs FY 2025-26 and FY 2026-27