Old vs New Tax Regime: Which Should You Pick?

The new regime is now the default

Since the new tax regime became the default from FY 2023-24 onward, if you don't actively opt for the old regime, you're filed under the new one automatically. For FY 2025-26, the new regime has no tax up to ₹4 lakh, a standard deduction of ₹75,000, and — because of the Section 87A rebate — effectively no tax liability up to ₹12 lakh of income for most salaried taxpayers.

What the old regime still offers

The old regime's basic exemption is lower — ₹2.5 lakh (₹3 lakh for senior citizens, ₹5 lakh for super senior citizens) — but it comes with the full set of deductions the new regime mostly strips out: Section 80C (up to ₹1.5 lakh), HRA, home loan interest under Section 24(b), 80D health insurance, and more. Whether that's worth more than the new regime's lower rates and higher basic exemption depends entirely on how much you're actually claiming.

Where the break-even actually sits

As a rough guide: if your total eligible deductions comfortably exceed ₹4–4.5 lakh a year — a home loan, HRA, full 80C, health insurance — the old regime often still wins, particularly at higher income levels. If your deductions are modest — some 80C, maybe health insurance — the new regime's lower rates usually come out ahead. There isn't a single number that works for everyone, because it depends on your specific mix of deductions, not just your income.

You can switch — with one condition

Salaried individuals can choose between the two regimes every year when filing their return. If you have business or professional income, though, switching back to the old regime after opting for the new one comes with restrictions — it's not a free choice every year in the same way. Run both numbers before you file, not after.