Old Tax Regime vs New Tax Regime: Which Should You Choose (2026)?
The New Tax Regime is now the default, with lower slab rates but very few deductions allowed. The Old Regime retains higher slab rates but lets you claim deductions like Section 80C (₹1.5L), HRA, home loan interest (Section 24) and more. As a rule of thumb: if your total eligible deductions exceed roughly ₹3.5–4 lakh, the Old Regime likely saves more tax; below that, the New Regime usually wins.
Key differences
| Factor | Old Regime | New Regime |
|---|---|---|
| Tax slabs | Higher rates per slab | Lower rates per slab |
| Section 80C (ELSS, PPF, insurance) | Allowed, up to ₹1.5L | Not allowed |
| HRA exemption | Allowed | Not allowed |
| Home loan interest (Sec 24) | Allowed (self-occupied, up to ₹2L) | Not allowed (self-occupied) |
| Standard deduction (salaried) | Allowed | Allowed |
| Default regime | Opt-in | Default (automatic) |
Who benefits from the Old Regime
Salaried individuals paying significant rent (claiming HRA), those with an active home loan, and anyone maximising 80C investments (ELSS, PPF, life insurance) plus health insurance (80D) often save more under the Old Regime.
Who benefits from the New Regime
Taxpayers with few investments or deductions, freelancers/consultants without HRA, and anyone who prefers simplicity over deduction-tracking generally pay less under the New Regime due to its lower slab rates.
Can you switch between regimes?
Salaried individuals can choose either regime each year when filing their return. Business owners and professionals (with business income) have more limited switching rights once they opt out of the default New Regime.
Not sure which saves you more? Our income tax return filing service calculates both and files under whichever is lower.