Old vs New Tax Regime With a Home Loan
A home loan is the single strongest argument for the old regime — ₹2,00,000 of interest deduction that the new regime doesn't allow at all. We stacked it with maxed-out 80C and 80D and checked whether it's actually enough to flip the result.
Old vs New Tax Regime Calculator
Enter your loan interest, 80C, and 80D to compare your own numbers.
The short answer
It narrows the gap a lot, but under FY 2025-26's slabs it rarely flips the result. With 80C maxed, home loan interest maxed at ₹2,00,000, and ₹25,000 of 80D, the new regime still wins at every income level we checked — from a wide margin at ₹15L down to a much closer one near ₹14L.
Three income levels, with a maxed-out home loan
Deductions held constant across all three: 80C ₹1,50,000 (maxed), home loan interest ₹2,00,000 (maxed, self-occupied property, Section 24(b)), and 80D ₹25,000.
| Gross salary | New regime tax | Old regime tax | New regime saves |
|---|---|---|---|
| ₹15,00,000 | ₹97,500 | ₹1,40,400 | ₹42,900 |
| ₹20,00,000 | ₹1,92,400 | ₹2,96,400 | ₹1,04,000 |
| ₹25,00,000 | ₹3,19,800 | ₹4,52,400 | ₹1,32,600 |
Notice the gap widens again as income rises past ₹20L — the fixed ₹3,75,000 of deductions is worth proportionally less at higher incomes, while the new regime's lower rates keep compounding in its favour. A home loan helps most, relatively speaking, in the middle of this range.
Pushing deductions to the realistic maximum
We went further: adding NPS 80CCD(1B) (₹50,000) on top of the above takes total deductions to ₹4,25,000. At ₹20,00,000 gross, that brings old-regime tax down to ₹2,80,800 — still ₹88,400 more than the new regime's ₹1,92,400.
We then swept gross salaries from ₹10L to ₹30L using the most aggressive realistic deduction total we could justify — ₹4,75,000, adding a higher 80D (₹75,000, for senior-citizen parents) on top of maxed 80C, home loan interest, and NPS. Even then, the new regime won in every case. The closest gap found was at ₹14,00,000 gross, where new-regime tax (₹81,900) still beat old-regime tax (₹91,000) by ₹9,100.
In other words: under the current FY 2025-26 slabs, it takes an unusually large stack of deductions, at a fairly specific income level, to get the old regime even close — and we didn't find a combination where it actually won. If your own deductions go beyond what's modelled here (multiple properties, HRA on top of a home loan, etc.), check your exact numbers rather than assuming.
What the new regime gives up here
The new regime doesn't allow home loan interest, 80C, or 80D at all — its only offsets are the ₹75,000 standard deduction and its own lower slab rates and thresholds. For homeowners with a large loan, that trade-off is real; it's just not usually enough to overcome the new regime's structural rate advantage at these income levels.
FAQ
It narrows the gap significantly but, under the current FY 2025-26 slabs, it rarely flips the result on its own. With 80C maxed at ₹1,50,000, home loan interest capped at ₹2,00,000, and ₹25,000 of 80D, the new regime still wins at ₹15L, ₹20L, and ₹25L gross salary in every case we checked — though the savings shrink from over a lakh to well under half that at lower incomes.
We swept gross salaries from ₹10L to ₹30L with the maximum realistic old-regime deductions we could justify (80C, home loan interest, NPS 80CCD(1B), and a higher 80D for senior-citizen parents — about ₹4,75,000 in total) and never found a case where the old regime won. The closest was ₹14L gross, where the new regime still came out ahead by about ₹9,100. If your own deductions are unusually large, check your exact numbers on the calculator rather than assuming.
For a self-occupied property, Section 24(b) caps the interest deduction at ₹2,00,000 per year in the old regime. The new regime does not allow this deduction at all — it's one of the biggest differences between the two regimes for homeowners.
Not for a self-occupied property. The new regime allows almost no deductions — home loan interest, 80C, 80D, and HRA exemption are all old-regime-only. The new regime's only offset is its ₹75,000 standard deduction (salaried/pension income) and its lower slab rates.
Interest on a loan for a let-out property is treated differently and isn't capped the same way as self-occupied property interest — this calculator and post cover the self-occupied case only. If you have a rented-out property, get your specific figures checked by a tax professional.
Last verified: 12 Aug 2026
Source: incometax.gov.in — "Salaried Individuals for AY 2026-27" (https://www.incometax.gov.in/iec/foportal/help/individual/return-applicable-1). Not the site's general "New Tax vs Old Tax Regime FAQs" page, which is stale.
This is an indicative estimate for FY 2025-26 (AY 2026-27) based on the slabs, deductions, and rebate rules published on incometax.gov.in as understood at the time of writing. It does not cover let-out property interest, multiple properties, or every deduction combination. Confirm your exact liability with a qualified tax professional before filing or making financial decisions.