Do you want to keep more of your hard-earned money this year? You don't have to be scared of income tax deductions, but understanding them can feel like solving a giant puzzle. Many things have changed for people who earn a monthly salary since the government updated the rules in the 2026 Budget. You need to know which rules apply to you at this time if you want to lower your tax bill. Therefore, choosing the right path can save you thousands of rupees. At TaxAbide, we believe that everyone should understand their money. Whether you are a new worker or an expert, knowing about income tax deductions for salaried employees is the best way to grow your savings.
If you choose the default way to pay tax, you are using the new system. A tax deduction in the new tax regime is a special amount you can subtract from your total income before the government calculates your tax. In the past, this system did not offer many benefits. However, starting in 2026, the government made it much more friendly for workers.
Because the new system is now the default, you will automatically be taxed this way unless you tell your boss otherwise. This system offers lower tax rates, which means you might pay less even without many extra savings.
You might wonder, what is standard deduction in the new tax regime, and how does it help you? Think of it as a "free pass" from the government. It is a fixed amount of ₹75,000 that you can take away from your total salary.
The best part is that you do not need to show any bills or receipts to get this. Since it is a flat amount, every salaried person gets it automatically. Therefore, if your total salary is ₹12.75 lakh, this deduction brings your taxable income down to ₹12 lakh. Because of the Section 87A rebate, you end up paying zero tax
Many people ask about their rent. Specifically, they want to know about the hra deduction in the new tax regime. Here is the simple truth: you cannot claim HRA (House Rent Allowance) if you choose the new tax system.
The new system is designed to be simple. While you lose the rent benefit, you gain from the lower tax slabs. If your rent is very high, you might want to check the old system instead. However, for most middle-income earners, the new system still wins because the rates are so low.
Important Income Tax Deductions for Salaried Employees Even though the new system is popular, many people still use the old system to claim more income tax deductions. If you have a home loan or pay for insurance, the old system might be your best friend.
If you took a loan to study, you can get a big reward. The interest on education loan tax deduction under Section 80E allows you to subtract the interest you pay from your income. There is no upper limit on this amount! You can claim this for up to eight years. Furthermore, this applies whether you studied in India or abroad.
Under the old system, you can still use Section 80C to save up to ₹1.5 lakh. This includes things like your life insurance, kids' school fees, and your provident fund. Additionally, Section 80D lets you save tax on health insurance for you and your parents.
Choosing between the systems depends on your lifestyle. If you do not have many investments, the new regime is likely better. On the other hand, if you have a big home loan and pay high rent, the old system could save you more.
At TaxAbide, we help you do the math so you do not have to worry. Our team loves making taxes simple for everyone. If you want to learn more about our story, you can visit our About Us page.
Managing your income tax deductions is the smartest way to plan your future. By using the standard deduction and choosing the right regime, you can protect your wealth. Always remember to keep your documents ready before the filing season starts.
If you feel confused, do not wait until the last minute. You can always Contact Us for expert help. We are here to make sure you abide by the law while keeping your pockets full.
Yes, if you are a salaried employee, you can choose the best system every time you file your taxes.
It is available for all salaried employees and pensioners. It does not matter how much you earn.
No, you do not need to submit rent receipts because HRA is not allowed in the new system.
You can claim it for a total of eight years or until the interest is fully paid, whichever comes first.
In the new regime, you pay zero tax if your total income is up to ₹12.75 lakh after the standard deduction.