New tax regime: 3 smart ways to reduce taxable income while filing ITR 2026

Many taxpayers choose the new tax regime because it offers lower tax rates and no tax on salary income up to Rs 12.75 lakh. While deductions such as Section 80C, HRA, LTA and Section 80D are largely unavailable, some key tax benefits can still help further lower your taxable income.

Salaried employees and pensioners can claim a standard deduction of Rs 75,000 without submitting any proof, bills or investments. For example, if your salary income is Rs 15 lakh, your taxable income reduces to Rs 14.25 lakh after claiming the deduction.

An employer’s contributions to an employee's NPS Tier-I account qualify for deduction under Section 80CCD(2).
● Deduction up to 14% of basic pay + DA
● Available over and above the standard deduction
For instance, if your basic salary is Rs 10 lakh and your employer contributes Rs 1.4 lakh to NPS, the full amount can be claimed as a deduction.

The tax benefit is available only if the combined employer contribution to NPS, EPF and superannuation fund does not exceed Rs 7.5 lakh in a financial year. Also, contributions to NPS Tier-II accounts are not eligible for tax benefits.

Taxpayers can claim a deduction on interest paid on a home loan taken for a let-out property. According to tax experts, for a let-out property, there is no monetary cap on tax deductibility of interest expense incurred on a loan borrowed for buying or building the property.

Some additional benefits available under the new tax regime include:
● Family pension deduction: Lower of Rs 25,000 or one-third of pension received
● Deduction for Agniveer Corpus Fund under Section 80CCH
● Conveyance, travel and transport allowances for eligible employees
● Deduction under Section 80JJAA for eligible businesses on additional employee cost