Tax Regime Changes: FY 2024-25 vs FY 2025-26
Understand the differences in slab structures, standard deductions, and tax savings under the Union Budget updates.
Standard Deduction Increased
In the New Tax Regime, the standard deduction is increased from ₹50,000 to ₹75,000 for FY 2025-26. The Old Regime standard deduction remains unchanged at ₹50,000.
Revised Slabs (New Regime)
The slabs under the New Tax Regime have been revised to provide more tax-free brackets, raising the 5% slab threshold.
New Tax Regime Slabs Comparison
| Taxable Income Slab | FY 2024-25 Rate | FY 2025-26 Rate |
|---|---|---|
| Up to ₹3,00,000 | Nil | Nil |
| ₹3,00,001 - ₹7,00,000 | 5% (up to ₹6L) | 5% |
| ₹7,00,001 - ₹1,00,000 | 10% (₹6L - ₹9L) | 10% |
| ₹1,00,001 - ₹1,20,000 | 15% (₹9L - ₹12L) | 15% |
| ₹1,20,000 - ₹1,50,000 | 20% (₹12L - ₹15L) | 20% |
| Above ₹1,50,000 | 30% | 30% |
Key Takeaways: Which one is better?
- For Salaried Employees: The New Tax Regime has become highly attractive due to the ₹75,000 standard deduction and full tax rebates (Section 87A) rendering taxable incomes up to ₹7,00,000 tax-free.
- For High Deductions (Old Regime): If you pay significant home loan interest (Section 24b) and invest heavily in Section 80C, 80D, etc., the Old Regime may still offer tax savings. However, the New Regime continues to be the default choice and requires no proof submission.