Old vs New Tax Regime: Which is Better for Your Income?

• Finance Minister Nirmala Sitharaman will present the Union Budget on February 1, 2026, focusing on personal income tax reform for the middle class.
• The new income tax regime now offers zero tax liability for annual taxable income up to 12 lakh rupees, up from 5 lakh rupees, due to an increased exemption limit under Section 87A.
• Salaried employees and pensioners in the new regime get a standard deduction of 75,000 rupees, making gross annual income up to 12.75 lakh rupees tax-free, compared to 50,000 rupees (5.50 lakh tax-free) in the old regime.
• The new regime is simpler, has lower tax rates, requires less paperwork, and is now the default option unless taxpayers actively choose the old regime.
• Choosing between regimes depends on individual tax exemptions; the new regime benefits those with fewer deductions, while the old regime is better for those utilizing significant deductions like 80C, 80D, HRA, and home loan interest.

Why It Matters: The choice between old and new tax regimes depends on individual deductions and financial situations.