Old vs New Tax Regime: Which Should You Choose for FY26?

Choosing between the old and new tax regimes for FY26 can significantly impact your tax savings. The new, simplified tax regime is more attractive for most taxpayers, offering a higher basic exemption limit and fewer deductions. Here’s a breakdown:

New Tax Regime:

• Basic exemption limit raised to ₹4 lakh.
• Tax rebate limit increased to ₹12 lakh.
• No tax on income up to ₹12.75 lakh.
• Simple structure with fewer deductions.

Old Tax Regime:

• Higher tax rates.
• Allows various deductions like 80C, 80D, and home loan interest.
• Suitable if your deductions exceed ₹8 lakh for incomes over ₹24 lakh.

Key Considerations:

• For incomes up to ₹12.75 lakh, the new regime is generally better due to the higher exemption and rebate limits.
• For incomes above ₹24 lakh, if your deductions are substantial, the old regime may still offer better savings.
• Assess your specific deductions and potential tax savings before making a decision.

Ultimately, the choice depends on your individual financial situation and the deductions you can claim. Evaluate both regimes and select the one that maximizes your tax savings.