Which Deductions Are Allowed in the New Tax Regime for FY 2025–26

If you’re wondering which deductions are allowed in the new tax regime, the government has simplified the system by keeping only select deductions while offering lower tax rates. The idea is to make tax filing easier, with fewer exemptions and less paperwork.

Understanding Which Deductions Are Allowed in the New Tax Regime

Under the new tax regime for FY 2025–26, most traditional deductions from the old regime, such as Section 80C, 80D, and 80TTA, are not permitted. However, taxpayers can still benefit from a few key deductions that remain available.

Here’s a breakdown of which deductions are allowed in the new tax regime:

• Standard deduction: ₹75,000 for salaried individuals and pensioners.
• Employer’s contribution to NPS: Up to 14% of basic salary (for government employees) or 10% (for others).
• Interest on home loan (Section 24b): Up to ₹2 lakh for self-occupied property.
• Pension scheme contributions: Under Section 80CCD(2) and related Central Government schemes.
• Medical expenses for disabled dependents: As per Section 80DD or 80U.
• Interest on savings bank accounts: Up to ₹10,000 for non-senior citizens.
• Interest on deposits for senior citizens: Up to ₹50,000.
• Specific deductions under Sections 80JJAA and 80M (for employment generation and company dividends).

These deductions aim to balance tax benefits with simplified compliance, giving taxpayers flexibility to choose between the old and new regimes.

Know Which Deductions Are Allowed in the New Tax Regime Before You File

Understanding which deductions are allowed in the new tax regime helps you make informed decisions, optimise your tax liability, and file returns smartly without missing out on the benefits that still apply.