Old vs New Tax Regime: How to Actually Choose in FY 2025-26

Since the new tax regime became the default, we get the same question every filing season: which one should I pick? The honest answer is that it depends on your deductions — but the decision follows a clear pattern once you know what to look for.

Start with your deductions

The new regime offers lower slab rates but strips away most deductions and exemptions. The old regime keeps them. So the whole decision comes down to how much you can legitimately claim.

• Section 80C investments (up to ₹1.5 lakh)
• Home loan interest under Section 24(b)
• HRA exemption if you pay rent
• Section 80D health insurance premiums
• NPS contributions under 80CCD(1B)

As a rough rule, if your total eligible deductions cross roughly ₹3.75 lakh, the old regime usually wins. Below that, the new regime's lower rates often come out ahead.

Don't decide on rules of thumb alone

Thresholds are useful for intuition, but the only reliable answer is a side-by-side computation on your actual numbers. For every return we file, we run both regimes and show you the exact difference before you commit.

The best regime isn't the one with lower rates — it's the one that produces lower tax on your specific income and deductions.

A few things people miss

Salaried employees can switch regimes every year, but business owners who opt out of the new regime face restrictions on switching back. If you have business income, plan the choice carefully — it's not a yearly toggle for you.