How to Save Tax in the New Tax Regime (FY 2025–26)

The new tax regime in India has made tax filing simpler, with lower slab rates and fewer deductions. However, many taxpayers still wonder how to save tax in the new tax regime effectively. Let’s break it down.

Key Features Before You Learn How to Save Tax in the New Tax Regime

To understand how to save tax in the new tax regime, it’s essential to know its core structure:

• The basic exemption limit has increased to ₹12 lakh (effectively ₹12.75 lakh with standard deduction for salaried individuals).
• Tax slabs start at 5% for income above ₹4 lakh and gradually rise to 30% for income above ₹24 lakh.
• No major exemptions like HRA, LTA, 80C, or 80D are available.
• A standard deduction of ₹75,000 is allowed for salaried taxpayers.

The focus, therefore, is on optimising income placement within lower tax brackets rather than relying on exemptions.

How to Save Tax in the New Tax Regime

Even without major deductions, there are ways to optimise your tax outgo:

1. Use the Standard Deduction

Every salaried taxpayer automatically gets a ₹75,000 deduction from gross income, reducing taxable income directly.

2. Choose Employer Benefits Wisely

Opt for cost-efficient salary structures such as meal cards, employer NPS contributions, or reimbursements that are not taxable.

3. Compare Both Regimes Each Year

The government allows switching between the old and new regimes yearly. Calculate which one helps you better understand how to save tax in the new tax regime for your income bracket.

4. Invest for Real Returns, Not Just Deductions

Since most deductions are removed, focus on investments that grow your wealth efficiently, such as NPS, mutual funds, or fixed income options.

5. Plan for Lower Bracket Management

If your income nears the next slab, consider legitimate income timing or employer-provided benefits to remain in a lower bracket.

Here’s a summary of the slab rates for FY 2025–26 (AY 2026–27):

Mastering How to Save Tax in the New Tax Regime

Learning how to save tax in the new tax regime isn’t about finding loopholes; it’s about making smarter income decisions. With higher exemptions and simpler slabs, effective planning ensures you pay less and save more without depending on traditional deductions.