The Union Budget 2025 just dropped a bombshell:
Zero tax under the new regime for income up to ₹12,00,000 — even without investing a single rupee.
This massively shifts the breakeven point between the old and new tax regimes.
But what if you have EPF, a home loan, or health insurance? Is the old regime still worth it?
Let’s break it all down with updated slab rates, smart scenarios, and the new breakeven logic.
What Changed in Budget 2025?
New Regime Slabs (FY 2025-26)
| Income Slab (₹) | Tax Rate |
|---|---|
| 0 – 4,00,000 | Nil |
| 4,00,001 – 8,00,000 | 5% |
| 8,00,001 – 12,00,000 | 10% |
| 12,00,001 – 16,00,000 | 15% |
| 16,00,001 – 20,00,000 | 20% |
| 20,00,001 – 24,00,000 | 25% |
| Above 24,00,000 | 30% |
Standard Deduction = ₹75,000 87A Rebate extended up to ₹12,00,000 income
Scenario 0: ₹12,00,000 Salary — New Regime = ZERO Tax
- Gross Income: ₹12,00,000
- Standard Deduction: ₹75,000
- Net Taxable Income: ₹11,25,000
- Full rebate under Section 87A
- Total Tax Payable: ₹0
So if your income is ₹12L or less, new regime is clearly better — no deductions needed.
But What About Those Earning More?
Let’s compare both regimes for higher income levels, and calculate how much you need to deduct to make the old regime worth it.
Scenario 1: ₹15,00,000 Salary
New Regime:
- Income = ₹15,00,000
- Standard Deduction = ₹75,000
- Taxable = ₹14,25,000
- Tax:
- ₹0–4L → Nil
- ₹4–8L → ₹20,000
- ₹8–12L → ₹40,000
- ₹12–14.25L → ₹33,750
- Total Tax = ₹93,750 + 4% Cess = ₹97,500
Old Regime:
To pay less than ₹97,500, your taxable income must fall to ~₹10L.
That means:
Breakeven deductions: ₹4,25,000
Scenario 2: ₹20,00,000 Salary
New Regime:
- Income = ₹20,00,000
- Std Deduction = ₹75,000
- Taxable = ₹19,25,000
- Tax:
- ₹4–8L → ₹20,000
- ₹8–12L → ₹40,000
- ₹12–16L → ₹60,000
- ₹16–19.25L → ₹65,000
- Total Tax = ₹1,85,000 + Cess = ₹1,92,400
Old Regime:
To beat this, your taxable must fall to ~₹15.5L Breakeven deductions: ₹4.5L–₹5L
Rule of Thumb: Updated Breakeven Chart
When Old Regime Still Wins (Even in 2025)
If you claim:
| Deduction Type | Amount |
|---|---|
| EPF / LIC / 80C | ₹1,50,000 |
| Home Loan Interest | ₹2,00,000 |
| Health Insurance (80D) | ₹25,000–₹75,000 |
| NPS / HRA / Other | ₹50,000+ |
| Total | ₹4.5L–₹5L+ |
Old regime can still beat the new regime for high earners with full deductions
Misconceptions Busted
Final Verdict
| Choose This Regime | If… |
|---|---|
| New Regime | You earn up to ₹12L OR don’t claim major deductions |
| Old Regime | You claim ₹4.25L+ in deductions (EPF, home loan, 80D) |
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https://stoxntax.com/2025/02/18/budget-2025-huge-tax-cuts-find-out-if-you-should-switch-to-the-new-tax-regime-now-with-our-excel-calculator/
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