New vs Old Tax Regime: Which Saves You More in 2024-25?
For FY 2024-25, the new tax regime is now the default and offers a standard deduction of ₹75,000 for salaried employees (up from ₹50,000) with tax-free income up to ₹7 lakh via rebate under Section 87A. The old regime makes sense only if your total eligible deductions — 80C (₹1.5L), HRA, NPS (₹50,000 under 80CCD(1B)), home loan interest (₹2L under 24b), and others — exceed approximately ₹3.75 lakh for someone earning ₹15 lakh. For most taxpayers with fewer deductions, the new regime now delivers lower tax.
Frequently asked questions
Quick answer
Who should stick with the old tax regime in 2024-25?
Taxpayers who claim large deductions benefit from the old regime. If you claim the full ₹1.5L under 80C, ₹50,000 under 80CCD(1B) for NPS, HRA of ₹1L+, and home loan interest of ₹2L, the old regime usually saves more tax at incomes above ₹10-12 lakh.
Who should stick with the old tax regime in 2024-25?
Taxpayers who claim large deductions benefit from the old regime. If you claim the full ₹1.5L under 80C, ₹50,000 under 80CCD(1B) for NPS, HRA of ₹1L+, and home loan interest of ₹2L, the old regime usually saves more tax at incomes above ₹10-12 lakh.
What is the break-even deduction amount between the two regimes?
The break-even depends on income. At ₹10L income, you need deductions above ~₹2.5L for the old regime to win. At ₹15L, the threshold is around ₹3.75L. Above ₹20L, you generally need 80C + HRA + home loan interest all at maximum to justify the old regime.
Can I switch between new and old tax regime every year?
Salaried employees with no business income can switch between the two regimes every financial year. Business owners and self-employed individuals can switch only once after opting out of the new regime.
Is HRA exemption available under the new tax regime?
No. HRA exemption is not available under the new tax regime. If you pay significant rent and receive HRA from your employer, this is one of the strongest reasons to evaluate the old regime carefully before switching.