With the Union Budget 2025 revising tax slabs and making the new regime the default choice, taxpayers are faced with an important decision:

Should you stick with the old regime or switch to the new one?

The answer depends on one key factor, your total deductions. This article helps you understand how to compare both regimes using a breakeven point analysis that takes into account your income level and eligible deductions.

What Is the Breakeven Point in Tax Planning?

The breakeven point is the amount of tax deductions you need under the old regime for it to be more beneficial than the new regime.

If your total deductions exceed the breakeven value for your income bracket, you will likely pay less tax under the old regime. If they don’t, the new regime will save you more.

This approach simplifies the decision and avoids guesswork. Instead of comparing dozens of tax rules, all you need to do is:

1. Know your net taxable income

2. Add up your deductions under the old regime

3. Compare them against the breakeven value for your income slab.

New Tax Regime Slabs for FY 2025–26 (Updated)

As per Budget 2025, these are the updated slab rates under the new tax regime:

• Up to ₹4 lakh: Nil

• ₹4 lakh to ₹8 lakh: 5 percent

• ₹8 lakh to ₹12 lakh: 10 percent

• ₹12 lakh to ₹16 lakh: 15 percent

• ₹16 lakh to ₹20 lakh: 20 percent

• ₹20 lakh to ₹24 lakh: 25 percent

• Above ₹24 lakh: 30 percent

Note: Deductions under Section 80C, 80D, 24(b), HRA, LTA, and others are not available in the new regime.

Why Breakeven Analysis Matters for Tax Regime 2025?

Earlier, many people defaulted to the old regime because of its generous exemptions and deductions. However, with the new regime offering more granular slabs and lower rates, that approach no longer applies automatically.

Let’s now explore how much you need to deduct from your income under the old regime to beat the new regime.

Breakeven Point: When Does the Old Regime Make Sense?

To make this decision easier, our experts at Enrichwise analyzed actual tax outcomes across various income levels.

The chart below illustrates the tax payable under both regimes, and how much you stand to gain by switching to the new regime.

Here’s what the numbers say:

This chart is based on realistic assumptions, including commonly claimed deductions under the old regime like:

• ₹2,00,000 under Section 24(b) (home loan interest)

• ₹1,50,000 under Section 80C

• ₹50,000 under Section 80CCD (NPS)

• ₹50,000 under Section 80D (medical insurance)

• ₹75,000 for LTA

• ₹50,000 standard deduction

Key Observations from the Chart

• At an income of ₹12 lakh, the new regime results in zero tax, while the old regime requires paying ₹54,700.

• The new regime becomes especially advantageous at higher incomes. At ₹25 lakh and above, the savings consistently hit ₹85,800.

• For incomes up to ₹20 lakh, the decision depends more on your actual deductions. But beyond that, the new regime is almost always better — unless your deductions are unusually high.

Important: Avoid taking a home loan solely for tax-saving purposes. The tax benefits under Section 24(b) are no longer enough to make that strategy effective in the new regime.

How to Use the Breakeven Point to Make the Right Tax Choice

Now that you’ve seen both the tax slab structure and the breakeven gains across income levels, the decision becomes much easier. You don’t need to guess or calculate your tax liability from scratch each time.

Here’s a quick decision checklist:

• Step 1: Note your gross annual income

• Step 2: Add up your eligible deductions under the old regime (80C, 80D, 24(b), NPS, HRA, etc.)

• Step 3: Compare the total to the breakeven value for your income bracket

• Step 4: If your deductions are less than the breakeven amount, the new regime is likely better

• Step 5: If your deductions are more than the breakeven amount, the old regime might save you more

If you’re still unsure, connect with Team Enrichwise and get your tax planning sorted.

Frequently Asked Questions

Who Benefits More from Each Tax Regime?

Choose the New Regime if:

• You are salaried with few or no deductions

• You prefer a simple, no-maintenance tax process

• You do not claim HRA, home loan interest, or large Section 80C investments

• Your income is under ₹12 lakh and you aren’t optimising for deductions

Choose the Old Regime if:

• You have multiple deductions (HRA, 80C, 80D, 24(b), NPS)

• You’re repaying a home loan or paying high rent

• You are comfortable with a more complex filing process in exchange for bigger savings

• Your total deductions exceed the breakeven point shown earlier

Remember, it’s not about which regime is generally better, it’s about which one is better for you.

Don’t Guess. Calculate. Then Decide.

The revised tax regime structure has simplified the decision-making process. By using the breakeven point as your guide, you avoid confusion and make a tax choice based on your actual numbers, not guesswork.

Here’s what you should take away:

• The new regime is better for taxpayers with low or no deductions

• The old regime benefits those who can maximize deductions

• The breakeven chart shows exactly where the tipping point lies based on income

• One small misstep could cost you tens of thousands in unnecessary tax

So before you file, run the numbers. Then make the smarter choice.

Need Help Deciding? Let Enrichwise Guide You

Not everyone has the time or tools to crunch tax calculations — and that’s where we come in.

At Enrichwise, we specialize in personal tax planning and optimization. We’ll assess your income, deductions, and financial goals to recommend the right tax regime — and help you save more, year after year.

Book a free tax regime consultation today. Your money deserves more than guesswork.