How Couples Can Harness the Best of Both Old and New Tax Regimes

Couples could use house rent allowance and tax planning to lower their overall tax outgo post-budget 2025

- Shipra Singh

After Budget 2025 generously slashed tax rates across all income ranges in the new tax regime, the general consensus is that the old regime is a thing of the past. Well, not yet for those paying rent. The tax-saving component of house rent allowance (HRA) makes the old tax regime more beneficial in some cases. One such case is of married couples, who can use HRA strategically to save taxes based on their salary and tax slabs.

Popular deductions fall short After Budget 2025, the break-even limits—minimum deductions needed to make the old tax regime worthwhile—have nearly doubled. For incomes above ₹24 lakh, taxpayers now need at least ₹8 lakh in deductions and exemptions to save more under the old system. With other tax benefits too small to bridge the gap, HRA remains the key tool to reach this threshold.

However, rent would need to be really high for HRA to tip the balance in the old regime's favour. This is because the popular deductions of 80C, medical insurance, and NPS along with ₹50,000 standard deduction can give you tax-exempt income of only up to ₹2.75 lakh. The remaining ₹5.25 lakh has to come from big components like HRA or car lease.