Old vs New Tax Regime: How Salaried Employees Can Make the Smartest Choice (2025–26)

Comparison of Old vs New Tax Regime for Salaried Employees in India for FY 2025–26

Navigating India’s evolving tax system is no longer a once-a-year job — it demands smart decisions well in advance.

Following the latest Budget 2025 announcements, salaried individuals must make an important choice:
Continue with the traditional Old Tax Regime or shift to the simpler New Tax Regime?

Your selection could either maximize your savings or lead to silent financial leakage over time.
In this detailed guide, we’ll walk you through everything — slab rates, real salary calculations, marginal relief concepts, and what happens if your income crosses ₹12 lakh by even a single rupee.

Let’s understand it step-by-step.

📚 What is the Fundamental Difference Between Old and New Tax Regimes?

Here’s the simple version:

  • Old Tax Regime:
    You get to claim multiple deductions and exemptions like:
    • ₹1.5 lakh investment under Section 80C
    • Medical insurance premium under Section 80D
    • House Rent Allowance (HRA) exemption
    • Interest paid on home loans (Section 24b)
    • Leave Travel Allowance (LTA)
    In short: higher slabs, but more ways to save tax through paperwork and planning.
  • New Tax Regime:
    Offers lower tax rates, but with minimal deductions. Only the standard deduction (₹75,000) and some employer-side contributions like NPS/EPF are allowed.

✅ The focus is on simplicity — no investment proofs, no complex documentation.

📈 New Tax Slabs for FY 2025–26 (Applicable under New Regime)

Income SlabTax Rate
Up to ₹4 lakhNil
₹4,00,001–₹8,00,0005%
₹8,00,001–₹12,00,00010%
₹12,00,001–₹16,00,00015%
₹16,00,001–₹20,00,00020%
₹20,00,001–₹24,00,00025%
Above ₹24,00,00030%

Source: Official Income Tax Slabs and Notifications Source.

🎯 What New Benefits Were Introduced in Budget 2025?

Two major changes have made the New Regime extremely attractive:

ParticularsAmount (FY 2025–26)
Standard Deduction₹75,000
Section 87A Rebate₹60,000

✅ If your net taxable income (after ₹75,000 standard deduction) stays within ₹12 lakh, you qualify for a ₹60,000 rebate — effectively reducing your final tax payable to zero.

🧮 Real-Life Example 1: Salary of ₹12.75 lakh

Suppose your gross salary is ₹12,75,000.

Step-by-step:

  • Gross Salary = ₹12,75,000
  • (–) Standard Deduction = ₹75,000
  • ➡️ Net Taxable Income = ₹12,00,000

Tax Calculation:

Taxable SlabRateTax Amount
0–₹4 lakh0%₹0
₹4–8 lakh5%₹20,000
₹8–12 lakh10%₹40,000
  • Basic Tax = ₹60,000
  • 87A Rebate = ₹60,000
  • Final Tax = ₹0

✅ Congratulations — you pay zero tax if your salary after standard deduction fits within ₹12 lakh!

⚠️ Real-Life Example 2: Salary of ₹13 lakh

Now imagine your gross salary is ₹13,00,000.

Step-by-step:

  • Gross Salary = ₹13,00,000
  • (–) Standard Deduction = ₹75,000
  • ➡️ Net Taxable Income = ₹12,25,000

Tax Calculation:

Taxable SlabRateTax Amount
0–₹4 lakh0%₹0
₹4–8 lakh5%₹20,000
₹8–12 lakh10%₹40,000
₹12–12.25 lakh15%₹3,750
  • Basic Tax = ₹63,750
  • Cess @4% = ₹2,550
  • Total Tax = ₹66,300

🛡️ How Marginal Relief Saves You

Here’s the trap many employees fall into:
By earning just ₹25,000 extra, they lose the entire ₹60,000 rebate and suddenly face ₹66,300 tax!

Luckily, Marginal Relief is designed to protect you.

Let’s see:

  • Extra Income above ₹12 lakh = ₹25,000
  • Extra Tax without relief = ₹66,300

Since extra tax > extra income, Marginal Relief applies.

Thus:

  • Your final tax payable becomes just ₹25,000 (equal to the extra income earned).

✅ Marginal relief ensures you don’t get unfairly penalized for marginal increases in salary!

📋 Salary vs Tax Payable (Including Marginal Relief)

Gross SalaryNet Taxable IncomeMarginal Relief Applicable?Final Tax Payable
₹12.75 lakh₹12 lakhYes (87A rebate)₹0
₹13 lakh₹12.25 lakhYes (Marginal Relief)₹25,000
₹13.5 lakh₹12.75 lakhNo₹38,400 (approx.)

🏡 When Does the Old Regime Still Make Sense?

If you’re claiming multiple deductions such as:

  • ₹1.5 lakh under Section 80C
  • ₹25k–₹75k under Section 80D (health insurance)
  • HRA exemptions for rented accommodation
  • Interest on home loans under Section 24(b)

then the Old Tax Regime could still offer better savings despite higher tax rates.

📝 Pro Tip:
Always total up your available deductions before deciding.

📢 Important Warning: Salary Above ₹12 Lakh?

If your taxable salary crosses ₹12 lakh by even ₹1 after standard deduction:

  • You lose the ₹60,000 rebate immediately.
  • Your tax liability increases steeply.
  • You must depend on Marginal Relief if eligible.

✅ Always calculate net taxable income, not just gross salary, while doing tax planning.

🙋 Frequently Asked Questions (FAQs)

1. Can salaried individuals switch between tax regimes every year?

✅ Yes! You can opt for a different tax regime every financial year if you are a salaried taxpayer.

2. Is Standard Deduction available under both regimes?

✅ Absolutely. ₹50,000 under the Old Regime and ₹75,000 under the New Regime (from FY 2025–26).

3. What deductions are allowed under the New Regime?

✅ Only a few:

  • Standard Deduction (₹75,000)
  • Employer’s NPS/EPF contributions
  • Agniveer Corpus Fund contribution

4. Should I still invest even if I choose the New Regime?

✅ Yes! Smart investments build wealth over the long term — not just for tax savings.

🎯 Conclusion: Choose Smartly, Choose Wisely

The New Tax Regime is a great fit for those who prefer simplicity and don’t rely much on deductions.
If your taxable salary remains within ₹12 lakh after deductions, it could mean zero tax payable.

However, if you are actively investing or have heavy deductions lined up, the Old Regime could still offer better overall savings.

✅ Run side-by-side calculations.
✅ Consult a financial advisor if needed.
✅ Keep an eye on the ₹12 lakh slab!

Today’s smart choice will compound into tomorrow’s financial freedom.

Read other popular article: Trump Tariffs 2025: Temporary Relief for India Amid Global Trade Tensions

175 thoughts on “Old vs New Tax Regime: How Salaried Employees Can Make the Smartest Choice (2025–26)”

  1. Looking at slot game return rates, platforms like Jilislot stand out by combining AI insights with player-friendly design, offering a smart edge in the competitive online gaming world.

  2. I’m excited to see how AI is reshaping design workflows. Tools like Lovart offer a fresh way to blend creativity with automation-especially cool for turning pixel art into modern visuals. Can’t wait to see it in action!

  3. Thanks for the insightful breakdown! It’s refreshing to see a guide that blends practical tips with immersive storytelling. For those diving deeper into AI tools, I highly recommend checking out Best AI Tools to explore top resources.

  4. Transform your living space with timeless style and function from JASIWAY. Our versatile JASIWAY sofa bed is perfect for hosting guests or relaxing in style—an essential sofa bed for modern living. Add charm and utility to your room with a JASIWAY coffee table, or choose a sleek coffee table that fits any décor. Get organized in style with a JASIWAY dressing table, designed for elegance and convenience—your ideal dressing table awaits. Elevate your entertainment setup with a JASIWAY TV stand, crafted for durability and beauty—every TV stand is built to impress. Redefine comfort with a JASIWAY sofa that blends luxury and practicality. Whether it’s a centerpiece or a cozy spot, the perfect sofa is just a step away. From design to comfort, JASIWAY delivers furniture that fits your life beautifully.

  5. Online gaming platforms like JLJLPH are raising the bar with live dealers and secure interfaces. Their slot variety and easy registration process make it a top pick for casual and serious players alike.

  6. 我們致力於為全港市民提供安全、專業、有系統的游泳訓練課程。課程涵蓋幼兒、兒童、青少年及成人,從基本漂浮、換氣技巧,到四式泳法(自由式、蛙式、背泳、蝶泳)訓練,一應俱全。無論您居住在將軍澳、觀塘、柴灣、荔枝角、大埔或粉嶺,都可以找到就近的泳池地點上課。每位學員都會由經驗豐富、持牌認可的游泳教練指導,確保在歡樂中學習,在安全中進步。透過我們的游泳班與游泳會,讓學員建立自信、鍛鍊體魄,甚至為將來參加比賽奠定基礎。

  7. Jili Online really stands out with its AI-powered insights-great for players aiming to boost their odds. The platform’s variety and security make it a top pick for Filipino gamers. Check it out at Jili Online!

  8. It’s so important to remember enjoyment is key with any online activity. Platforms like phdream22 login seem to prioritize user experience – a good sign! Let’s all play responsibly & keep it fun. 😊 Knowing access is streamlined helps too!

  9. Mobile gaming is evolving so fast! Seeing platforms prioritize user experience-like optimizing every tap & swipe-is key. Exploring options like PH Login Casino could really elevate playtime & engagement. It’s all about seamless access, right?

  10. Great breakdown of blackjack strategy-really helped me see the game from a new angle. It’s always fun to learn how small decisions can lead to big wins. If you’re looking to try out some of these strategies in action, check out Jili No1 for a smooth and engaging gaming experience.

  11. Online gambling requires smart fund management, and platforms like Jili77 offer a secure, user-friendly environment with diverse game options to help players stay in control.

  12. Interesting take! Seeing platforms like ph978 really push boundaries – anticipating what players want before they even know it is key. The future of immersive gaming is definitely here! 🤔

  13. Mobile gaming is evolving so fast! It’s all about seamless experiences now, and optimizing for mobile-first is key. I was reading about game ph login and their focus on user behavior – really smart! Definitely a step up for convenience.

  14. Interesting points on adapting strategy to different stack sizes! Seeing platforms like 78win focus on smooth onboarding is key for new players – tech & tradition blending well. Solid analysis overall!

  15. Scratch cards are such a fun, quick thrill! It’s interesting how platforms like SZ777 casino login focus on user journeys – making it easy to engage is key, right? Reducing friction seems smart for boosting those completion rates! 👍

  16. Interesting take on responsible gaming! It’s great to see platforms prioritizing education, especially for newcomers. I noticed phlwin casino offers guided tutorials – a smart approach to building player confidence & understanding game mechanics. Definitely a plus!

  17. Profitez d’une abonnement IPTV exceptionnelle en 2025 avec le meilleur fournisseur Smart IPTV France ! Regardez plus de 63 000 chaînes HD & 4K, accédez à plus de 86 000 films et séries en VOD, et profitez d’une stabilité à 100 % sans interruptions. Regardez vos contenus préférés où que vous soyez, à tout moment et sur n’importe quel appareil : Smart TV, PC, mobile, tablette et plus encore ! Ne manquez plus aucun match, film ou série – optez pour la qualité et la performance d’un smart IPTV premium !

  18. Interesting points! Understanding game fundamentals is key, and a structured approach really helps. Resources like PH365 Login offer that – building skills beyond just luck is crucial for long-term success, especially with evolving strategies.

  19. Basic strategy really shifts your perspective at the blackjack table! Seeing those probabilities makes a huge difference. Just explored jiliboss and their game variety looks fun – a good place to practice! Definitely helps build confidence. 👍

  20. En 2025, la télévision traditionnelle
    laisse place à une solution plus moderne, plus riche et plus
    flexible : l’abonnement IPTV. Grâce à Smart IPTV France, vous
    avez accès à plus de 63 000 chaînes HD/4K et un catalogue impressionnant de 86 000
    films et séries en VOD, accessibles à tout moment, sur
    tous vos appareils (Smart TV, mobile, tablette, ordinateur ou Android box).
    La qualité de diffusion est exceptionnelle, avec zéro interruption et une interface simple d’utilisation.

    Ce service s’adresse aussi bien aux passionnés
    de sport qu’aux amateurs de cinéma ou aux familles
    recherchant des contenus variés. En tant qu’iptv abonné, vous bénéficiez d’un code IPTV sécurisé qui
    vous permet de profiter de vos programmes favoris sans limite
    géographique. Que vous soyez en France, à l’étranger
    ou en déplacement, votre iptv abonnement vous suit partout avec une stabilité remarquable.

    Testez gratuitement pendant 24 heures pour découvrir pourquoi Smart IPTV est considéré comme le meilleur iptv en France.
    Grâce à un support client réactif et une compatibilité
    multi-plateforme, nous garantissons une expérience
    premium pour tous nos utilisateurs. Ne perdez
    plus de temps avec des services limités : optez dès maintenant pour la performance, la liberté et la richesse de
    l’IPTV France nouvelle génération.

    Visitez dès maintenant france iptv
    et découvrez le meilleur abonnement IPTV en France.

  21. Découvrez la puissance du smart IPTV et transformez votre manière de regarder la télévision. Fini les coupures,
    les limites géographiques ou les abonnements coûteux.

    Avec un iptv abonnement, vous accédez à des milliers de contenus en un clic.

    Compatible avec tous vos appareils, notre service propose plus de 63 000 chaînes et 86 000
    contenus VOD disponibles à tout moment. Il vous suffit d’entrer un code IPTV pour débloquer un univers
    complet de divertissement, sans installation complexe.

    Notre plateforme IPTV France vous assure une diffusion stable, une interface intuitive,
    et un support disponible 24h/24. Testez notre service pendant 24h gratuitement et profitez d’une qualité incomparable.

    Visitez dès maintenant iptv abonné
    et découvrez le meilleur abonnement IPTV en France.

  22. That’s a great point about volatility! Finding the right balance is key, and platforms like jlboss com seem to offer a huge variety, from classic to modern slots – good for testing different strategies! Quick signup is a plus too.

  23. That’s a great point about responsible gaming – crucial for enjoying platforms like JLBoss! It’s cool they prioritize a smooth experience; easy login with boss jl is a big plus. Finding a balance is key to having fun! ✨

  24. Lottery odds are fascinating, aren’t they? Seeing platforms like 99win Club offer diverse games-from slots to live casino-adds another layer of probability to consider! If you’re exploring options, check out the 99win app download apk for a quick start. It’s interesting how accessibility impacts participation!

  25. Interesting read! Thinking about how tech is changing things – even in gaming. Seeing platforms like 33wim app focus on streamlined, secure experiences with things like biometric verification is impressive. It’s the future!

  26. It’s easy to get carried away with online casinos! Responsible play is key, & platforms like jl boss games are innovating with tech – secure logins & smart recommendations can help manage your experience. Stay cautious!

  27. That’s a really interesting point about game accessibility! Seeing platforms like 99wim game prioritize fast, secure registration with AI is a smart move for wider adoption – less friction is always good! 👍

  28. Interesting take on baccarat strategy! Seeing platforms like jl boss slot innovate with smoother deposits (GCash is key!) & diverse games definitely enhances the experience. It’s all about maximizing enjoyment, right?

Leave a Comment

Your email address will not be published. Required fields are marked *

Scroll to Top