Every tax season, one question seems to haunt most salaried individuals:
“Should I go with the old regime or opt for the new one?”
The answer lies in understanding your breakeven deductions — the key figure that tells you when the old tax regime saves you more than the new one.
Rather than relying solely on Section 80C or HRA benefits, knowing your breakeven deductions gives you a smarter, more strategic way to choose the right regime and save thousands in taxes.
🔍 What is a Breakeven Deduction?
Think of it like this — if your total deductions and exemptions exceed a certain threshold (called the breakeven point), then the old tax regime is better for you.
If your deductions are below that threshold, you’re better off with the new tax regime, which offers lower tax rates but fewer deductions.
📊 Breakeven Deduction by Salary Slab
Below is a simplified chart showing how much deduction you need to break even under both regimes (as per FY 2025-26). If you can claim more than this amount, consider sticking to the old regime:
| GROSS SALARY | BREAKEVEN DEDUCTION REQUIRED |
| ₹7 lakh | ₹1,50,000 |
| ₹8 lakh | ₹2,50,000 |
| ₹10 lakh | ₹4,50,000 |
| ₹14 lakh | ₹5,18,750 |
| ₹20 lakh | ₹7,08,350 |
| ₹25 lakh | ₹8,50,000 |
| ₹1 crore | ₹8,00,000 |
| ₹2 crore | ₹8,00,000 |
| ₹5 crore | ₹8,00,000 |
Note: These values exclude the standard deduction
🧠 Why Does Breakeven Matter?
Let’s take an example:
Mr. A earns ₹40 lakh annually and is evaluating which regime to choose.
Under the old regime, he claims the following deductions:
- HRA: ₹10,00,000
- PPF/ELSS: ₹1,50,000
- NPS (80CCD): ₹50,000
- Medical Insurance (80D): ₹50,000
Total Deductions: ₹12,50,000
As per the breakeven chart, he would only need about ₹8,00,000 in deductions to benefit from the old regime. Since his deductions are higher than the breakeven amount, the old regime clearly works better for him.
But for someone with only ₹2-3 lakh in deductions, the new regime may save more taxes.
🧩 Some Key Insights:
- If you don’t have deductions like HRA, home loan interest, NPS, or 80C savings, the new regime is likely better for you.
- If your employer offers flexible salary structuring (like tax-free reimbursements), you can reduce your taxable income further — even under the new regime.
- Further you can also refer our previous blog on Hidden Tax Saving Gems in New Tax regime.
✅ So, Which Regime Should You Choose?
Use the breakeven deduction rule as your guide. If you’re above the breakeven limit, the old regime makes sense. If you’re below it, switch to the new regime and enjoy lower tax rates without paperwork.
📞 Still Unsure? Let Us Help You.
Not everyone has the time (or patience) to run these calculations every year. That’s why we’re here to assist you. Whether you’re a salaried individual or a consultant, we help you structure your income and select the best tax regime.
Let a professional guide you.
👉 Contact us for personalised advice, tax planning tips, or assistance with your ITR filing.
✅ Email: help@etaxmate.in, Phone: +91 7389176127
🌐 Website: etaxmate.in