Union Budget 2026: New vs Old Income Tax Regimes Explained

• Finance Minister to present Union Budget 2026 on February 1 for the 9th consecutive time, with focus on income tax reforms.
• The new income tax regime, introduced in 2020, offers lower tax rates but fewer deductions and exemptions, becoming the default option in 2023.
• Key changes in the new regime include increased basic exemption limits (Rs 3 lakh in 2023, Rs 4 lakh in 2025) and higher standard deductions (Rs 50,000 in 2023, Rs 75,000 in 2025).
• The old regime allows over 70 deductions and exemptions (e.g., 80C, 80D, 24B) but has higher tax rates, varying by age group.
• Taxpayers can switch between regimes annually; understanding differences is crucial for effective tax planning, especially regarding surcharges.

Why It Matters: Taxpayers must understand the differences between the new and old income tax regimes for optimal financial planning.