What the new tax regime actually is
The new regime is now the default way India taxes individuals. It offers lower, wider slabs and a big rebate, in return for dropping nearly all the old deductions and exemptions. If you file without making a choice, this is the system you're in.
The slabs, briefly
Nothing is taxed up to ₹4 lakh. From there it steps up gently — 5%, 10%, 15%, 20%, 25% — reaching 30% only above ₹24 lakh. The full table lives on our tax slabs page, but the shape matters more than the detail: rates rise slowly and the top rate starts much higher than it used to.
The ₹75,000 standard deduction
Every salaried employee and pensioner gets a flat ₹75,000 knocked off their salary automatically — no proof, no forms. It's larger than the ₹50,000 the old regime gives, and it's the reason a ₹12.75 lakh salary can end up fully tax-free.
Section 87A rebate — the ₹12 lakh headline
This is the star of the new regime. If your taxable income is up to ₹12,00,000, the rebate reduces your tax to zero. So while the slab table shows tax building up from ₹4 lakh onwards, in practice you pay nothing until you cross ₹12 lakh of taxable income.
Marginal relief — the safety net just above ₹12 lakh
Cross ₹12 lakh by a little and you might fear a sudden tax cliff. Marginal relief prevents that: it caps your tax so you never pay more in tax than the amount by which your income exceeds ₹12 lakh. The calculator applies this automatically, which is why incomes at ₹12.1 or ₹12.5 lakh show a gentle, sensible figure rather than a jump.
What you give up
The catch is deductions. Under the new regime you cannot claim 80C, 80D, HRA, LTA or home loan interest on a self-occupied house. The only meaningful exceptions are the standard deduction and your employer's NPS contribution under 80CCD(2). If your life involves big deductions, read old vs new before you settle.
Surcharge and cess still apply
High earners pay a surcharge on their tax — 10% above ₹50 lakh, 15% above ₹1 crore, capped at 25% under the new regime. A 4% health and education cess is then added to everyone's tax. Both are handled for you in the calculator.
Who should still consider the old regime?
The new regime suits the majority, but not everyone. You should seriously price the old regime if you tick several of these boxes: you're repaying a home loan and claim the full ₹2 lakh interest; you pay significant rent and receive HRA; you max out 80C every year; and you hold a good health insurance policy under 80D. Add those together and the deductions can outweigh the new regime's lower rates. The only way to be sure is to compare — which takes one tap on the calculator.
So is it right for you?
For a large majority of salaried people with ordinary deductions, yes — the lower rates and the ₹12 lakh rebate are hard to beat, and there's no paperwork. But "usually" isn't "always". Spend one minute with the calculator, toggle both regimes, and let your own numbers decide.
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Frequently asked questions
Is the new tax regime the default for FY 2025-26?
Yes. If you don't actively choose, you are taxed under the new regime. Salaried taxpayers can still opt for the old regime while filing if it results in lower tax.
How does the 12 lakh rebate work?
Under Section 87A, if your taxable income is up to 12,00,000, the rebate reduces your income tax to zero. Marginal relief protects incomes just above 12 lakh from a sudden jump.
What deductions are allowed under the new regime?
Only the 75,000 standard deduction and the employer's NPS contribution under 80CCD(2). Deductions such as 80C, 80D, HRA and home loan interest do not apply.