Old vs New Tax Regime: Which One Should You Choose?
Detailed breakdown of Budget 2024 revised slabs, deductions permitted, and the break-even math.
What Changed in Budget 2024 for the New Tax Regime?
The Union Budget 2024 significantly enhanced the appeal of the New Tax Regime for salaried professionals:
- Higher Standard Deduction: Increased from ₹50,000 to ₹75,000 for salaried employees and pensioners.
- Wider Tax Brackets: The 5% slab now spans ₹3 Lakh to ₹7 Lakh, the 10% slab spans ₹7 Lakh to ₹10 Lakh, and the 15% slab spans ₹10 Lakh to ₹12 Lakh.
- Tax-Free Income up to ₹7.75 Lakh: Combining the ₹75,000 standard deduction with the Section 87A tax rebate (applicable up to ₹7,00,000 taxable income), salaried individuals earning up to ₹7,75,000 pay exactly ₹0 tax.
Tax Slabs Comparison for FY 2024-25 (AY 2025-26)
| Income Slab | New Tax Regime Rate | Old Tax Regime Rate |
|---|---|---|
| Up to ₹2,50,000 | Nil | Nil |
| ₹2,50,001 - ₹3,00,000 | Nil | 5% |
| ₹3,00,001 - ₹5,00,000 | 5% | 5% |
| ₹5,00,001 - ₹7,00,000 | 5% | 20% |
| ₹7,00,001 - ₹10,00,000 | 10% | 20% |
| ₹10,00,001 - ₹12,00,000 | 15% | 30% |
| ₹12,00,001 - ₹15,00,000 | 20% | 30% |
| Above ₹15,00,000 | 30% | 30% |
The Break-Even Rule of Thumb
If your total eligible deductions under the Old Tax Regime (Section 80C + 80D + HRA exemption + Section 24b Home Loan Interest) exceed approximately ₹3.75 Lakh to ₹4.25 Lakh (depending on your income slab), the Old Tax Regime is generally more beneficial. If your deductions are below this threshold, the New Tax Regime with its lower slab rates and ₹75,000 standard deduction typically yields lower overall tax.