Finance Minister Nirmala Sitharaman, in the Union Budget 2025-26, introduced significant changes to the New Tax Regime, tweaking tax slabs to make it more attractive for especially lower and middle-income taxpayers. With lower tax rates and minimal deductions, the new regime has been structured to simplify taxation, while the old regime continues to offer tax benefits through multiple exemptions and deductions. The FM again this year did not make any changes to the Old Tax Regime, encouraging more taxpayers to switch to the new regime.

Now, the big question for taxpayers is: Which tax regime is better for them?

In this analysis, we compare the old and new tax regimes across four income levels: Rs 15 lakh, Rs 20 lakh, Rs 24 lakh, Rs 30 lakh and Rs 50 lakh. We calculate tax liabilities under both regimes, factoring in all available deductions, exemptions, and the applicable 4% cess.

Also read: Your up to Rs 12 lakh annual income is not tax-exempt as wrongly perceived – it’s taxable! Tax structure decoded here

1. Tax calculation for Rs 15 lakh annual income (Old Vs New Tax Regime)

Old Tax Regime Calculation:

Gross Income: Rs 15,00,000

Deductions:

Standard Deduction: Rs 50,000
Section 80C (Max): Rs 1,50,000
Section 80D (Max): Rs 1,00,000
Home Loan Interest (Section 24B): Rs 2,00,000

Total Deductions: Rs 50,000 + Rs 1,50,000 + Rs 1,00,000 + Rs 2,00,000 = Rs 5,00,000

Taxable Income: Rs 15,00,000 - Rs 5,00,000 = Rs 10,00,000

Tax under Old Tax Regime:

0-2.5 lakh: Nil
2.5 lakh - 5 lakh: 5% of 2.5 lakh = Rs 12,500
5 lakh - 10 lakh: 20% of 5 lakh = Rs 1,00,000
Total tax: Rs 12,500 + Rs 1,00,000 = Rs 1,12,500

Cess (4%): Rs 1,12,500 × 4% = Rs 4,500

Total Tax Liability (Old Regime): Rs 1,12,500 + Rs 4,500 = Rs 1,17,000

New Tax Regime Calculation:

Gross Income: Rs 15,00,000
Standard Deduction: Rs 75,000
Taxable Income: Rs 15,00,000 - Rs 75,000 = Rs 14,25,000

Tax under New Tax Regime:

0-4 lakh: Nil
4 lakh - 8 lakh: 5% of 4 lakh = Rs 20,000
8 lakh - 12 lakh: 10% of 4 lakh = Rs 40,000
12 lakh - 14.25 lakh: 15% of 2.25 lakh = Rs 33,750
Total tax: Rs 20,000 + Rs 40,000 + Rs 33,750 = Rs 93,750

Cess (4%): Rs 93,750 × 4% = Rs 3,750

Total Tax Liability (New Regime): Rs 93,750 + Rs 3,750 = Rs 97,500

Final Verdict: New Tax Regime is better for individuals earning Rs 15 lakh per annum as they will now save Rs 19,500 under revised new regime compared to Old Tax regime.

2. Tax calculation for Rs 20 lakh annual income (Old Vs New Tax Regime)

Old Tax Regime Calculation:

Gross Income: Rs 20,00,000

Deductions: Standard Deduction: Rs 50,000
 Section 80C (Max): Rs 1,50,000
 Section 80D (Max): Rs 1,00,000
 Home Loan Interest (Section 24B): Rs 2,00,000

Total Deductions: Rs 50,000 + Rs 1,50,000 + Rs 1,00,000 + Rs 2,00,000 = Rs 5,00,000

Taxable Income: Rs 20,00,000 - Rs 5,00,000 = Rs 15,00,000

Tax under Old Tax Regime:

0-2.5 lakh: Nil
2.5 lakh - 5 lakh: 5% of 2.5 lakh = Rs 12,500
5 lakh - 10 lakh: 20% of 5 lakh = Rs 1,00,000
10 lakh - 15 lakh: 30% of 5 lakh = Rs 1,50,000

Total tax: Rs 12,500 + Rs 1,00,000 + Rs 1,50,000 = Rs 2,62,500

Cess (4%): Rs 2,62,500 × 4% = Rs 10,500

Total Tax Liability (Old Regime): Rs 2,62,500 + Rs 10,500 = Rs 2,73,000

New Tax Regime Calculation:

Gross Income: Rs 20,00,000
Standard Deduction: Rs 75,000

Taxable Income: Rs 20,00,000 - Rs 75,000 = Rs 19,25,000

Tax under New Tax Regime:

0-4 lakh: Nil
4 lakh - 8 lakh: 5% of 4 lakh = Rs 20,000
8 lakh - 12 lakh: 10% of 4 lakh = Rs 40,000
12 lakh - 16 lakh: 15% of 4 lakh = Rs 60,000
16 lakh - 19.25 lakh: 20% of 3.25 lakh = Rs 65,000

Total tax: Rs 20,000 + Rs 40,000 + Rs 60,000 + Rs 65,000 = Rs 1,85,000

Cess (4%): Rs 1,85,000 × 4% = Rs 7,400

Total Tax Liability (New Regime): Rs 1,85,000 + Rs 7,400 = Rs 1,92,400

Final Verdict: Again, individuals earning Rs 20 lakh per annum are better off under the revised new tax slabs of the New Tax Regime as they will save Rs 80,600 per year in tax by opting for the new regime over the Old Tax Regime.

3. Tax calculation for Rs 24 lakh annual income (Old Vs New Tax Regime)

Old Tax Regime Calculation:

Gross Income: Rs 24,00,000

Deductions:
 Standard Deduction: Rs 50,000
 Section 80C (Max): Rs 1,50,000
 Section 80D (Max): Rs 1,00,000
 Home Loan Interest (Section 24B): Rs 2,00,000

Total Deductions: Rs 50,000 + Rs 1,50,000 + Rs 1,00,000 + Rs 2,00,000 = Rs 5,00,000

Taxable Income: Rs 24,00,000 - Rs 5,00,000 = Rs 19,00,000

Tax under Old Tax Regime:

0-2.5 lakh: Nil
2.5 lakh - 5 lakh: 5% of 2.5 lakh = Rs 12,500
5 lakh - 10 lakh: 20% of 5 lakh = Rs 1,00,000
10 lakh - 19 lakh: 30% of 9 lakh = Rs 2,70,000

Total tax: Rs 12,500 + Rs 1,00,000 + Rs 2,70,000 = Rs 3,82,500

Cess (4%): Rs 3,82,500 × 4% = Rs 15,300

Total Tax Liability (Old Regime): Rs 3,82,500 + Rs 15,300 = Rs 3,97,800

New Tax Regime Calculation:

Gross Income: Rs 24,00,000
Standard Deduction: Rs 75,000
Taxable Income: Rs 24,00,000 - Rs 75,000 = Rs 23,25,000

Tax under New Tax Regime:

0-4 lakh: Nil
4 lakh - 8 lakh: 5% of 4 lakh = Rs 20,000
8 lakh - 12 lakh: 10% of 4 lakh = Rs 40,000
12 lakh - 16 lakh: 15% of 4 lakh = Rs 60,000
16 lakh - 20 lakh: 20% of 4 lakh = Rs 80,000
20 lakh - 23.25 lakh: 25% of 3.25 lakh = Rs 81,250

Total tax: Rs 20,000 + Rs 40,000 + Rs 60,000 + Rs 80,000 + Rs 81,250 = Rs 2,81,250

Cess (4%): Rs 2,81,250 × 4% = Rs 11,250

Total Tax Liability (New Regime): Rs 2,81,250 + Rs 11,250 = Rs 2,92,500

Final Verdict: New Tax Regime seems better for taxpayers with an annual income up to Rs 24 lakh now as the revised slabs and structure in Budget 2025 will save them Rs 1,05,300 compared to old regime.

4. Tax calculation for Rs 30 lakh annual income (Old Vs New Tax Regime)

Old Tax Regime Calculation:

Gross Income: Rs 30,00,000

Deductions:

Standard Deduction: Rs 50,000
Section 80C (Max): Rs 1,50,000
Section 80D (Max): Rs 1,00,000
Home Loan Interest (Section 24B): Rs 2,00,000

Total Deductions: Rs 50,000 + Rs 1,50,000 + Rs 1,00,000 + Rs 2,00,000 = Rs 5,00,000

Taxable Income: Rs 30,00,000 - Rs 5,00,000 = Rs 25,00,000

Tax under Old Tax Regime:

0-2.5 lakh: Nil
2.5 lakh - 5 lakh: 5% of 2.5 lakh = Rs 12,500
5 lakh - 10 lakh: 20% of 5 lakh = Rs 1,00,000
10 lakh - 25 lakh: 30% of 15 lakh = Rs 4,50,000

Total tax: Rs 12,500 + Rs 1,00,000 + Rs 4,50,000 = Rs 5,62,500

Cess (4%): Rs 5,62,500 × 4% = Rs 22,500

Total Tax Liability (Old Regime): Rs 5,62,500 + Rs 22,500 = Rs 5,85,000

New Tax Regime Calculation:

Gross Income: Rs 30,00,000
Standard Deduction: Rs 75,000
Taxable Income: Rs 30,00,000 - Rs 75,000 = Rs 29,25,000

Tax under New Tax Regime:

0-4 lakh: Nil
4 lakh - 8 lakh: 5% of 4 lakh = Rs 20,000
8 lakh - 12 lakh: 10% of 4 lakh = Rs 40,000
12 lakh - 16 lakh: 15% of 4 lakh = Rs 60,000
16 lakh - 20 lakh: 20% of 4 lakh = Rs 80,000
20 lakh - 24 lakh: 25% of 4 lakh = Rs 1,00,000
24 lakh - 29.25 lakh: 30% of 5.25 lakh = Rs 1,57,500

Total tax: Rs 20,000 + Rs 40,000 + Rs 60,000 + Rs 80,000 + Rs 1,00,000 + Rs 1,57,500 = Rs 4,57,500

Cess (4%): Rs 4,57,500 × 4% = Rs 18,300

Total Tax Liability (New Regime): Rs 4,57,500 + Rs 18,300 = Rs 4,75,800

Final Verdict: Even those with an annual income of Rs 30 lakh will be benefitted under the New Tax Regime with latest revision in slabs. They will end up saving Rs 1,09,200 if they opt for the new regime now over the Old Tax Regime.

5. Tax calculation for Rs 50 lakh annual income (Old Vs New Tax Regime)

Old Tax Regime calculation:

Gross Income: Rs 50,00,000

Deductions:
 Standard Deduction: Rs 50,000
 Section 80C (Max): Rs 1,50,000
 Section 80D (Max): Rs 1,00,000
 Home Loan Interest (Section 24B): Rs 2,00,000

Total Deductions: Rs 50,000 + Rs 1,50,000 + Rs 1,00,000 + Rs 2,00,000 = Rs 5,00,000

Taxable Income: Rs 50,00,000 - Rs 5,00,000 = Rs 45,00,000

Tax under Old Tax Regime:

0-2.5 lakh: Nil
2.5 lakh - 5 lakh: 5% of 2.5 lakh = Rs 12,500
5 lakh - 10 lakh: 20% of 5 lakh = Rs 1,00,000
10 lakh - 45 lakh: 30% of 35 lakh = Rs 10,50,000
Total tax: Rs 12,500 + Rs 1,00,000 + Rs 10,50,000 = Rs 11,62,500

Cess (4%): Rs 11,62,500 × 4% = Rs 46,500

Total Tax Liability (Old Regime): Rs 11,62,500 + Rs 46,500 = Rs 12,09,000

New Tax Regime Calculation:

Gross Income: Rs 50,00,000
Standard Deduction: Rs 75,000
Taxable Income: Rs 50,00,000 - Rs 75,000 = Rs 49,25,000

Tax under New Tax Regime:

0-4 lakh: Nil
4 lakh - 8 lakh: 5% of 4 lakh = Rs 20,000
8 lakh - 12 lakh: 10% of 4 lakh = Rs 40,000
12 lakh - 16 lakh: 15% of 4 lakh = Rs 60,000
16 lakh - 20 lakh: 20% of 4 lakh = Rs 80,000
20 lakh - 24 lakh: 25% of 4 lakh = Rs 1,00,000
24 lakh - 29.25 lakh: 30% of 5.25 lakh = Rs 1,57,500
29.25 lakh - 49.25 lakh: 30% of 20 lakh = Rs 6,00,000

Total tax: Rs 20,000 + Rs 40,000 + Rs 60,000 + Rs 80,000 + Rs 1,00,000 + Rs 1,57,500 + Rs 6,00,000 = Rs 9,57,500

Cess (4%): Rs 9,57,500 × 4% = Rs 38,300

Total Tax Liability (New Regime): Rs 9,57,500 + Rs 38,300 = Rs 9,95,800

Final Verdict: Those with income up to Rs 50 lakh per annum will also save under the New Tax Regime than the old regime. After the revised tax slabs under the new regime, the calculation shows a saving of Rs 2,09,200 under the revised New Tax Regime.

Conclusion

After the major revision in the New Tax Regime slabs, calculations reveal that taxpayers across all income levels now benefit more under the new regime than the old one. Regardless of income, the new regime leads to tax savings for everyone. In this analysis, we compared tax liabilities under both regimes for annual incomes of Rs 15 lakh, Rs 20 lakh, Rs 24 lakh, Rs 30 lakh, and Rs 50 lakh. The results show that taxpayers at every level save more under the new tax regime.