Old vs new tax regime: deductions the old one needs to win

Since Budget 2025, salary up to ₹12.75 L a year pays no income tax in the new regime.^[1] For everyone above that, the old question is back every April when HR asks for your regime: old or new?

The honest answer is a number: how much you'd need to claim in deductions for the old regime to win. Here it is at five salaries, worked out with our tax regime calculator.

Why the new regime usually wins now

The new regime has lower rates and wider slabs, a ₹75K standard deduction, and a rebate that wipes out the tax on taxable income up to ₹12 L. The old regime has higher rates but lets you subtract deductions: HRA, 80C, 80D, your own NPS under 80CCD(1B), and home-loan interest under 24(b).

So the old regime wins only if your deductions are big enough to make up for its higher rates. Everything below is about that "big enough" line.

The deductions you'd need, at five salaries

We took a metro salary (basic at 50% of CTC, full PF) paying ₹30,000 a month in rent, and filled every deduction you can choose to its limit: 80C to ₹1.5 L (PF counts towards it), 80D to ₹50K for you and your parents, and ₹50K in your own NPS. No home loan yet.

Notice that the tick stops moving at ₹8 L. Once your income is in the top 30% slab of both regimes, the difference between them is fixed, so the deductions needed to close it are too. Meanwhile HRA's share shrinks, because rent stays the same while the HRA rule looks at a bigger basic.

When the old regime still makes sense

• You pay high rent in a metro on a mid-level salary. HRA is the biggest deduction most people have.
• You have a home loan with ₹1.5–2 lakh of yearly interest, on top of maxed 80C and 80D.
• You already invest the 80C and NPS amounts anyway. Don't lock money into ELSS or insurance just to chase a deduction; the tax saved is only a slice of what you put in.

If you'd have to create deductions to win, the new regime is usually the simpler and better choice. It also needs no investment proofs in January.

Check your own in-hand pay

The regime changes your monthly TDS, so it changes your salary credit. The take-home salary calculator shows both regimes as a payslip.

What this doesn't mean

• Your salary structure matters. A lower basic, a non-metro city or no rent changes every number here.
• Tax rules change. These figures follow Budget 2025 rules, for FY 2025-26 onward. Check the calculator after each Budget.
• This is a comparison, not tax advice. For capital gains, business income or other sources, check with a tax professional or the Income Tax Department.^[2]

Tax includes the 87A rebate, surcharge where it applies, and 4% cess. Salary: basic 50% of CTC, 10% variable pay, full PF, gratuity in CTC, metro HRA, ₹2,500 professional tax. For illustration only.