The Union Budget 2026's revisions to the new income tax regime offer significant savings for salaried employees, with those earning Rs 8-15 lakh annually saving between Rs 12,000 and Rs 28,000 in annual tax outgo compared to the pre-Budget regime. The zero-tax threshold has been raised to Rs 12 lakh under the new regime, and revised slabs provide a Rs 18,000 benefit on average for a taxpayer earning Rs 12 lakh per year.
The Budget also increased the standard deduction under the new regime from Rs 50,000 to Rs 75,000, providing an additional Rs 2,500-7,500 of tax savings depending on the individual's tax bracket. Finance experts recommend that employees earning up to Rs 15 lakh consider switching to the new regime as it is now likely more beneficial than the old regime for most taxpayers who do not have very large HRA deductions, home loan interest or 80C investments.
Taxpayers earning above Rs 15 lakh should do a detailed comparison between old and new regimes, factoring in deductions available under 80C (Rs 1.5 lakh), 80D health insurance (Rs 25,000), HRA and home loan interest. For those with significant deductions, the old regime may still be marginally better. Both regimes are available for employees, and the choice can be made afresh each year at the time of filing the income tax return.
