Union Budget 2026: Old vs New Tax Regime; what salaried taxpayers with Rs 15 lakh, Rs 25 lakh and higher income should opt

Going by the speech of the Finance Minister Nirmala Sitharaman in the Union Budget 2026 presented today, there has been no changes made in the current income tax slab rates. This once again brings the spotlight on a question that concerns every salaried taxpayer: should one opt for the old tax regime or the new tax regime?

While expectations of major changes always surround the Budget, the structure of salary taxation after today’s Budget announcements clearly reinforces one trend - the new tax regime continues to result in lower tax outgo for most salaried individuals, especially when deductions under the old regime are limited.

Over the past few years, the government has steadily nudged taxpayers towards the new tax regime by offering lower slab rates in exchange for giving up exemptions and deductions. Budget 2026 continues this approach by keeping the focus on simplicity, transparency, and ease of compliance.


Impact across different salary levels.

Across salary brackets, from middle-income earners to high-income professionals, the comparison shows a consistent pattern. The new tax regime leads to lower tax liability:

Salary Income Tax under old tax regime Tax under new tax regime Net benefit under the new tax regime:

Salary Income	Tax under old tax regime (in Rs)	Tax under new tax regime (in Rs)	Net benefit under the new tax regime (in Rs)
Rs 15,00,000	2,57,400	97,500	1,59,900
Rs 25,00,000	5,69,400	3,19,800	2,49,600
Rs 50,00,000	13,49,400	10,99,800	2,49,600
Rs 1,00,00,000	32,00,340	29,25,780	2,74,560
Rs 5,00,00,000	1,92,36,750	1,89,24,750	3,12,000

The old tax regime has not been abolished and continues to exist for a reason. It may still make sense for a limited category of taxpayers, such as:

• Individuals with a housing loan and high interest payments;
• Salaried employees receiving significant HRA benefits;
• Taxpayers are making full use of multiple deduction sections.

However, such cases are becoming fewer, and the effort required to plan, invest, and document deductions often outweighs the tax benefit.

New tax regime is no longer an alternative tax regime

The Union Budget 2026 has made it clear that the new tax regime is no longer an alternative, it is fast becoming the mainstream tax system for salaried individuals. While the old tax regime remains relevant for a small group of taxpayers, for most salaried Indians, lower tax rates with fewer conditions under the new regime translate into better outcomes.

As salary structures evolve and compliance expectations rise, the focus is shifting from “how much can I deduct” to “how much tax do I actually pay”, and on that count, the new tax regime continues to stay ahead.