I am a salaried employee and have always opted for the old regime. I have a home loan on which I claim the interest every year and also claim the 80C deduction by investing in PPF and ELSS. But now many people are suggesting to switch to new regime. Should I let go of my interest deduction? Which regime will be more beneficial in my case?
Old vs new regime: How to decide which tax regime will save more? | Breakeven points for FY 2025-26?
For years, the debate between old and new tax regimes was finely balanced. A few 80C investments, health insurance, and suddenly the old regime looked better.
Not anymore. With the latest changes in slabs and rebate, the new regime has pulled decisively ahead. For the average taxpayer, the gap is no longer small. The government has made its preference obvious — simplify and nudge everyone toward the new regime.
The numbers
Under the old regime, the rebate shields income only up to ₹5 lakh. In the new regime, it stretches all the way to ₹12 lakh. Add the higher standard deduction of ₹75,000, and a salaried individual can walk away tax-free up to ₹12.75 lakh.
Now, the deductions required to make the old regime work are unrealistically high. Here’s a table that shows how much in deductions (breakeven amount) you need at different income levels for the old regime to even match the new.
How to use this table?
- If your total deductions > break-even → the old regime wins.
- If your total deductions < break-even → the new regime is better.
A few things to keep in mind:
- The breakeven figures exclude the ₹50,000 standard deduction under the old regime.
- For tax calculation under both regimes, we’ve already accounted for the standard deduction: ₹75,000 in new, ₹50,000 in old.
- If you don’t have salary income (and therefore no standard deduction), your numbers will change.
What’s my take?
In my opinion, old regime is dead (for most of us). Think of a taxpayer earning ₹12 lakh, they would need ₹6.5 lakh in deductions just to keep pace with the new regime. That’s a tall ask.
Only taxpayers with large HRA + home loan interest or education loan interest might tip the scales. But that’s a narrow slice of taxpayers, maybe under 10%.
And then a handful deductions still survive under the new regime like employer NPS contributions and interest on let-out property loans. These should still be factored into your maths.
There’s another cost to the old regime. The government is tightening disclosures for every deduction you claim. More details, more proofs, more hassle. So if the savings are marginal, I’d ask is it worth the time and peace of mind.
If you earn from business or profession and plan to switch regimes, filing Form 10-IEA is mandatory.
To conclude, the old regime isn’t dead by law. But for most taxpayers, it’s dead in practice. Unless your deductions comfortably cross past the break-even line, sticking with the new regime isn’t just better, it’s common sense.
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3 major deductions under old scheme are:
- HRA recd when certain leverl of rent is actually paid
- Interest on housing loan
- Deduction u/s 80C, D, TTB ( can go upto 2.5 lakhs for senior citizens)
Hi @Surbhi_Pal
Is standard deduction of 75K available to HUF as well or only for Individual accounts ?
Hey @Vaibhav_Gupta ,
The standard deduction of ₹75,000 is only available against income from salary. Since HUF cannot earn a salary, this deduction is not applicable to HUF.
Old Regime vs New Regime – Which Works Better for You?
Since you already claim home loan interest deduction and 80C deductions (PPF, ELSS, etc.), the old regime has clear advantages in many cases. But let’s break this down:
What Do You Get in the Old Regime?
- Home Loan Interest Deduction: Up to ₹2,00,000 under Section 24(b).
- 80C Investments: Up to ₹1,50,000 through PPF, ELSS, LIC, etc.
- HRA & Other Deductions: If applicable, you can also claim exemptions for House Rent Allowance, medical insurance (80D), and more.
All these together often reduce your taxable income significantly.
What Does the New Regime Offer?
- Flat Tax Slabs with Lower Rates but no deductions or exemptions.
- You cannot claim your home loan interest deduction (except that the self-occupied property benefit is gone).
- You cannot claim 80C benefits, which means your PPF and ELSS investments won’t give tax relief anymore.
When Is the Old Regime Better?
Stick with the old regime if:
- You have a home loan and claim interest.
- You regularly invest under 80C.
- You also claim deductions under 80D (medical insurance) or HRA.
In your case, since you are already using both home loan interest and 80C, the old regime will likely save you more tax.
When Should You Consider the New Regime?
The new regime is better if:
- You don’t have a home loan.
- You don’t invest much in tax-saving schemes.
- Your deductions under 80C and 80D are minimal.
What’s the Best Way to Decide?
- Calculate tax liability under both regimes using this Software All in One for F.Y.2025-26.
- Compare the final amount payable.
- Choose the regime that saves more tax – you can change every year while filing ITR.