Old Vs new tax regime: Who should opt for which income tax regime now (2024)

FAQs

Should you switch to new tax regime? ›

Impact on Investments and Savings: Consider how switching tax regimes may affect your investments, savings, and financial planning strategies. Some tax-saving investments and deductions may not be available under the new tax regime, so evaluate the impact on your overall financial goals.

Reduce your tax deductions for tax savings, investments, etc. Arrive at your total income after reducing the tax deductions. Declare your gross income and tax deductions in ITR. The maximum rebate under section 87A for the AY 2024-25 is Rs 25,000 under the new tax regime and Rs 12,500 under the optional tax regime.

Standard Deduction 2023 and 2024: How Much It Is, When to Take It. The 2023 standard deduction for tax returns filed in 2024 is $13,850 for single filers, $27,700 for joint filers or $20,800 for heads of household. People 65 or older may be eligible for a higher amount.

> A salaried individual has the flexibility to switch between the new and the old tax regime every financial year. Even if the taxpayer has chosen the new tax regime for TDS throughout the year, they can still easily change your preferred tax regime when filing your ITR.

Old vs New Tax Regime: Can you switch tax regimes? Yes, if you are a salaried professional, you can switch tax regime. This time, the tax regime was also made the default regime, due to which taxpayers were confused about choosing their tax regime.

In the new regime, a standard deduction of Rs. 50,000 is offered to all taxpayers, regardless of their income level. Retirement Benefits: Both gratuity and leave encashment received upon retirement remain non-taxable.

The government sets the tax rates, which are based on several income brackets. The following formula is used to calculate income taxes: Gross Salary - Deductions = Taxable Income; Income Tax = (Taxable Income x Applicable Tax Rate) - Tax Rebate.

Is 80C applicable in new tax regime? No, Section 80C deductions are not available under the new tax regime. How to calculate tax in new regime? From FY 2023-24 (AY 2024-25) onwards, the tax slabs under the new tax regime have been revised, as per the table given in the beginning of this article.

What is the marginal relief in the new regime? ›

The marginal relief for income tax rebate is a new amendment to Section 87A applicable only to the new tax regime. Instead of paying the full tax amount if your income is more significant than Rs. 7,00,000, you can pay only a small amount for the excess income.

Section 80C provides deductions on various investments up to ₹ 1.5 lakh per year from your taxable income. In comparison, Section 80CCC provides a deduction of up to ₹ 1.5 lakh per annum for the contribution made by an individual towards specified pension funds.

Social Security income can be taxable no matter how old you are. It all depends on whether your total combined income exceeds a certain level set for your filing status. You may have heard that Social Security income is not taxed after age 70; this is false.

If you are 65 or older and blind, the extra standard deduction is: $3,700 if you are single or filing as head of household. $3,000 per qualifying individual if you are married, filing jointly or separately.

Certain taxpayers aren't entitled to the standard deduction: You are a married individual filing as married filing separately whose spouse itemizes deductions. You are an individual who was a nonresident alien or dual status alien during the year (see below for certain exceptions)

Under the New Tax Regime, you can enjoy tax-free income up to Rs 7.5 lakh after applying the standard deduction and tax rebate. Family pensioners can also benefit from this deduction—claim Rs 15,000 or 1/3rd (33.33 per cent) of their pension, whichever is lower.

Section 80C is the most well-known and widely used deduction. But it is mostly for those who will opt for or have already opted for the Old Tax regime. From PPF, house rent, mutual funds to donation to a religious organisation, investors can claim tax saving under Old Tax Regime through several options.