Old vs New Tax Regime FY 2025-26: break-even income, ₹75,000 standard deduction, and when to switch
FY 2025-26 old vs new regime break-even at ₹8L, ₹12L, ₹15L, ₹20L and ₹30L salary — verified slab math with Finance Act 2025 slabs, ₹75,000 standard deduction, and Section 87A rebate up to ₹60,000.
Harun Raaj
Chartered Accountant · Harun Raaj & Associates
For FY 2025-26 (AY 2026-27), the new tax regime wins for almost every salaried employee earning up to ₹12 lakh — Section 87A rebate makes the tax ₹0 on a pure-salary ₹12 lakh income — and it stays ahead at ₹20 lakh and ₹30 lakh unless your old-regime deductions cross roughly ₹7–8 lakh. The decisive change is Finance Act 2025: new-regime slabs widened to 0–4L / 4–8L / 8–12L / 12–16L / 16–20L / 20–24L / above 24L, the standard deduction stayed at ₹75,000 in the new regime (₹50,000 in the old), and the Section 87A rebate jumped to ₹60,000 for total income up to ₹12 lakh. The old regime still wins for high-deduction filers — big HRA, home-loan interest, and a full Chapter VI-A stack — but the break-even deduction threshold is higher than most calculators from last year still show.
The slabs that decide everything (FY 2025-26)
Both regimes carry a 4% health & education cess on tax. Standard deduction: ₹75,000 in the new regime (s.16(ia) read with s.115BAC), ₹50,000 in the old. Section 87A rebate: ₹60,000 in the new regime for total income up to ₹12,00,000; ₹12,500 in the old regime for taxable income up to ₹5,00,000.
The break-even table: how many deductions the old regime needs
"Break-even deductions" is the total Chapter VI-A + HRA + other old-regime deductions required for the old regime to tie the new regime's tax (including cess) on the same gross salary. Below the threshold, new wins; above it, old wins.
The shape of this table is the real story: the break-even threshold dips at ₹15 lakh (₹5.44L) after peaking at ₹12 lakh (₹6.50L) because the ₹12 lakh point is the 87A sweet spot where the new regime pays nothing. Above ₹12 lakh, the new regime's ₹0 is gone, so the deduction needed for old to win falls, then rises again as slab rates climb.
Worked example: Rohan earns ₹15 lakh
Persona: Rohan, salaried resident individual, FY 2025-26 (AY 2026-27).
Facts:
- Gross salary ₹15,00,000; only salary income
- Claims in the old regime: 80C ₹1,50,000 (EPF + ELSS), HRA exemption ₹1,20,000, NPS s.80CCD(1B) ₹50,000 — total ₹3,20,000
- New regime: none of the three is available; only standard deduction ₹75,000
New regime computation
Old regime computation
Result: new regime wins by ₹60,060 (₹97,500 vs ₹1,57,560). Rohan lost ₹3,20,000 of deductions to the new regime and still came out ahead — because the widened slabs and the ₹75,000 standard deduction more than compensated. For old to win at ₹15 lakh, his deductions would need to reach ≈ ₹5,44,000, not the ₹3,20,000 he has. Reproduce it in the Old vs New Regime Calculator.
What changed FY 2025-26: before/after diff
The FA 2025 changes moved the new regime from "better in the middle" to "better by default." The ₹12 lakh zero-tax headline — ₹12,00,000 gross minus ₹75,000 standard deduction = ₹11,25,000 taxable, with rebate ₹52,500 wiped by the ₹60,000 cap — is the single biggest reason the old regime's customer base shrank for FY 2025-26.
Who should still choose the old regime
The old regime wins only when legitimate old-regime deductions exceed the break-even threshold. Realistic winners:
- High HRA in a metro with rent receipts and a landlord PAN (where rent exceeds ₹1,00,000/year)
- A large home loan with ₹2,00,000 of interest under s.24(b) on a self-occupied property
- Maxed 80C + 80D + NPS 80CCD(1B) — ₹1.5L + ₹50k–₹1L + ₹50k
- Disability or health-heavy families relying on 80DD/80U/80D
If your stack falls below the threshold in the table, the new regime is the arithmetic winner — and it is the default regime, so doing nothing usually lands you there. Old regime requires a positive election at filing (or employer declaration for TDS).
Frequently asked questions
1. Is tax really zero up to ₹12 lakh salary in the new regime for FY 2025-26?
Yes, for pure salary income. ₹12,00,000 gross minus ₹75,000 standard deduction = ₹11,25,000 taxable; slab tax of ₹52,500 is fully wiped by the Section 87A rebate (ceiling ₹12,00,000, cap ₹60,000). Interest and capital gains push taxable income above the ceiling and change the answer.2. What is the break-even at ₹15 lakh salary?
≈ ₹5,44,000 of old-regime deductions. Below that, the new regime's ₹97,500 tax beats the old regime. Rohan's ₹3,20,000 stack was ₹2,24,000 short.3. At ₹20 lakh, how many deductions do I need for old regime to win?
≈ ₹7,08,000. A combination like metro HRA ₹2L+, home-loan interest ₹2L, full 80C ₹1.5L, NPS ₹50k, and 80D ₹50k+. Without a home loan and high HRA, the new regime's ₹1,92,400 is hard to beat.4. Is the standard deduction different between the regimes?
Yes. New regime ₹75,000; old regime ₹50,000 — both under s.16(ia). The ₹25,000 gap is one of three levers (with wider slabs and the 87A rebate) that push the balance to the new regime.5. What is the Section 87A rebate in the new regime for FY 2025-26?
₹60,000, available when total income does not exceed ₹12,00,000, with marginal relief just above the ceiling. The old regime keeps ₹12,500 up to ₹5,00,000.6. Can I switch regimes after filing?
The new regime is the default; you may choose the old regime when filing, but switching is locked for the year unless you have business income (which allows a once-per-lifetime switch under s.115BAC(6)). Decide before the return is filed.7. I earn ₹30 lakh — is old regime ever better?
Only with ≈ ₹8,00,000+ of deductions. At that income the new-regime tax is ₹4,75,800; you need a very heavy HRA + home-loan + 80C/80D stack to beat it. For most ₹30 lakh earners, new regime wins.---
Last verified: 2026-08-05 (FY 2025-26 / AY 2026-27)
Sources: s.115BAC (new regime slabs as amended by Finance Act 2025); s.16(ia) (standard deduction ₹75,000/₹50,000); s.87A (rebate ₹60,000 up to ₹12L new regime; ₹12,500 up to ₹5L old regime); s.115BAC(6) (regime switching for business income). All tax figures include 4% health & education cess; break-even thresholds computed from the slab tables above and reproducible from the worked example. For your exact salary, run the Old vs New Regime Calculator or book a consultation at harunraaj.com.
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