ITR filing 2026: 7 smart ways salaried employees can reduce tax under the new income tax regime

The employer's contribution to NPS under Section 80CCD(2) is one of the biggest tax-saving benefits available under the new tax regime. A deduction of up to 14% of basic salary plus dearness allowance is allowed over and above the Rs 75,000 standard deduction for all employees.

However, it should be noted that your own contribution to NPS does not qualify for deduction under the new tax regime.

Although an employee's own contribution to EPF is not eligible for deduction under the new tax regime, the employer's contribution continues to enjoy tax benefits, subject to the prescribed limits.

If the aggregate employer contribution to the EPF, NPS and Approved Superannuation Fund exceeds Rs 7.5 lakh in a financial year, the excess contribution becomes taxable.

The standard deduction of Rs 75,000 continues to be available to salaried employees and pensioners under the new tax regime. It is granted automatically and does not require any bills, investments or proof of expenditure.

Interest paid on a home loan for a let-out property can still be claimed as a deduction while computing income under the head House Property. However, if this deduction results in a loss under the head "House Property", such loss cannot be set off against income from any other head under the new tax regime.

Several employer-provided benefits continue to enjoy favourable tax treatment under the new regime. These include telephone and broadband reimbursements for official use, employer- sponsored mobile/device leasing programmes, and health, wellness and financial wellness programmes, subject to prescribed conditions. For Tax Year 2026-27, free meals and paid meal vouchers are also exempt up to Rs 200 per meal.

Although most allowances have become taxable, certain allowances granted for official duties continue to remain exempt. These include allowances for official travel, transfer, daily expenses, transport allowance for specially-abled employees, and uniform allowance, subject to prescribed conditions.

Gifts received from an employer are tax-free up to Rs 5,000 during FY 2025-26. This exemption limit will increase to Rs 15,000 from FY 2026-27. Separately, gifts received from specified relatives on the occasion of marriage, through inheritance or under a Will are generally exempt, irrespective of the amount.

Family pensioners opting for the new tax regime can claim a deduction. The deduction is restricted to the lower of one-third of the family pension received or Rs 25,000 per annum. This benefit continues to be available under the new tax regime.