For Gen Z and millennial taxpayers, the new tax regime is emerging as the clear winner—but not necessarily because it offers lower tax rates. The bigger reason is that younger earners increasingly have fewer of the deductions that once made the old regime attractive.
From an Rs 8 lakh earner to someone making Rs 50 lakh, the choice can change dramatically depending on how much a taxpayer can claim through deductions such as home-loan interest, 80C investments, HRA and health insurance.
According to ClearTax data cited by its founder and CEO Archit Gupta, 76% of under-25 filers now submit complex returns, compared with just 14% in assessment year 2022-23. At the same time, only 42% of filers reported salary as their sole source of income this year, down from 82% four years ago.That shift matters because today’s younger taxpayers are increasingly earning through investments, freelance work and side businesses, rather than relying entirely on salaried income and the traditional tax-saving deductions associated with the old regime. For a Gen Z/millennial earning ₹8 lakh, ₹12 lakh, ₹15 lakh, ₹20 lakh, ₹30 lakh and ₹50 lakh, which regime makes more sense? Gupta explains with the following table
Up to ₹24 lakh, the new tax regime is the ideal choice. With income above ₹24 lakh, the old regime becomes preferable with deductions worth ₹7.75 lakh
Radhika Goyal is Author of Taxconcept Gurugram head office, for deeply reported tax, gst and income tax articles on issues that matter. He splits her time between New Delhi and Bengaluru, and has worked as a reporter, a podcaster and an editor for publications across India.