New Tax Regime India 2025-26: Complete Guide for Salaried Employees
The New Tax Regime became the default regime for all taxpayers from FY 2023-24. For FY 2025-26, it has been made even more attractive — with a zero-tax threshold of ₹12 lakh and an enhanced standard deduction of ₹75,000.
New Tax Regime Slabs for FY 2025-26
| Income | Rate |
|---|---|
| Up to ₹4,00,000 | Nil |
| ₹4,00,001 – ₹8,00,000 | 5% |
| ₹8,00,001 – ₹12,00,000 | 10% |
| ₹12,00,001 – ₹16,00,000 | 15% |
| ₹16,00,001 – ₹20,00,000 | 20% |
| ₹20,00,001 – ₹24,00,000 | 25% |
| Above ₹24,00,000 | 30% |
All slab amounts above are after the ₹75,000 standard deduction for salaried employees. A 4% Health and Education Cess applies on the total tax computed.
The ₹12 Lakh Zero-Tax Benefit
Under Section 87A, if your taxable income (after standard deduction) does not exceed ₹12,00,000, you get a full tax rebate — your actual tax liability becomes zero. This effectively means salaried employees with gross income up to ₹12,75,000 (₹12L + ₹75K standard deduction) pay zero income tax under the new regime.
Standard Deduction in New Regime
From FY 2024-25 (Budget 2024), the standard deduction under the new tax regime was increased to ₹75,000 (from ₹50,000 earlier). This is automatic — no investment required to claim it. For pensioners, the standard deduction is also ₹75,000 under the new regime.
What Deductions Are NOT Available in the New Regime?
The new regime has lower rates but removes most deductions available under the old regime:
- Section 80C (PPF, ELSS, LIC, home loan principal) — ₹1.5L
- HRA exemption
- Section 80D (health insurance premium)
- Section 80CCD(1B) (NPS self-contribution) — ₹50,000
- Home loan interest deduction under Section 24(b)
- Leave Travel Allowance (LTA)
What IS Available in the New Regime?
- Standard deduction of ₹75,000
- Employer NPS contribution (Section 80CCD(2) — up to 10% of salary)
- Deduction for differently-abled individuals
- NPS under agniveer scheme
Who Should Choose the New Regime?
The new regime is generally better if your income is below ₹12.75 lakh (zero tax) or if your total deductions under the old regime are less than the break-even amount shown below:
| Salary (Annual) | Old Regime is Better If Deductions Exceed |
|---|---|
| ₹8 lakh | ~₹2.5 lakh |
| ₹12 lakh | ~₹3.25 lakh |
| ₹15 lakh | ~₹3.75 lakh |
| ₹20 lakh | ~₹4.25 lakh |
| ₹30 lakh | ~₹5.25 lakh |
Use our Salary Take-Home Calculator to get an exact comparison for your specific situation.
How to Switch to the New Regime?
The new regime is now the default. If you do nothing, you're in the new regime. If you want the old regime, you must actively opt for it:
- Inform your employer at the start of the financial year (Form 12BB)
- For salaried employees: you can switch every year when filing ITR
- For business income: switching is one-time — you cannot switch back and forth