New Tax Regime Deductions in 2025: What You Can Still Claim

When the new tax regime was introduced, many people thought it meant “no deductions at all.” That’s why most salaried employees stuck with the old system, because it offered plenty of ways to save tax through Section 80C, HRA, and more.

But here’s the truth: while the new regime has removed most traditional exemptions, it still offers a few key deductions that can help reduce your taxable income. And with the recent tax slab update in 2025, where income up to ₹12–12.75 lakh is tax-free, the importance of knowing exactly what’s allowed has become even greater.

In this article, we’ll go through the new tax regime deductions, the exemption list, and explain how the standard deduction in the new regime works.

What are the new tax regime deductions?

The new regime has cut down on the long exemption list from the old system, but a few important deductions remain. These include:

1. Standard Deduction
   
   • Available to salaried employees and pensioners.
     
   • For FY 2025–26, the standard deduction has been enhanced to ₹75,000.
     
   • This means if your salary is ₹12.75 lakh, you effectively pay zero tax after applying this deduction (thanks to the Section 87A rebate).
     
2. Employer’s contribution to NPS (Section 80CCD(2))
   
   • If your employer contributes to your NPS account, you can claim a deduction up to 10% of salary (14% for government employees).
     
3. Employer’s contribution to EPF
   
   • Contribution made by your employer towards your Employee Provident Fund is also tax-free up to the prescribed limit.
     
4. Section 80JJAA
   
   • Deduction for new employment provided by businesses.
     
   • Mostly useful for employers rather than salaried individuals.
     
5. A few specific allowances
   
   • Conveyance allowance for specially-abled employees.
     
   • Transport allowance for certain categories.
     

👉 Unlike the old regime, you don’t get popular deductions like 80C (PPF, ELSS, LIC), 80D (medical insurance), or HRA. But the standard deduction and employer-related benefits are still valuable in the new tax regime.

What is the standard deduction in the new tax regime?

The standard deduction is one of the most important reliefs available under the new tax regime. It’s a flat reduction in taxable salary, which means you don’t need to submit any proofs or documents.

• For FY 2025–26, the standard deduction in the new regime is ₹75,000.
  
• It is available to salaried employees and pensioners.
  
• This deduction directly reduces your taxable income, for example:
  

👉 Suppose your annual salary is ₹13 lakh.

• Apply the standard deduction of ₹75,000 → taxable income = ₹12.25 lakh.
  
• Thanks to the Section 87A rebate, you pay zero tax on this amount.
  

This is why the standard deduction is a game-changer in the new tax regime. It ensures that most middle-income salaried taxpayers enjoy zero liability up to ₹12.75 lakh (₹12 lakh + ₹75,000 deduction).

What exemptions are not available in the new regime (full exemption list)?

One of the biggest differences between the old and new systems is the removal of many popular exemptions and deductions. Here’s what you cannot claim under the new regime:

1. Section 80C deductions
   

No tax benefit on investments in PPF, ELSS, NPS (self-contribution), tax-saving FDs, or life insurance premiums.

2. House Rent Allowance (HRA)
   

Salaried employees living in rented houses cannot claim HRA exemption.

3. Leave Travel Allowance (LTA)
   

Travel expenses for holidays are not exempt.

4. Home loan interest (Section 24b)
   

Deduction of up to ₹2 lakh on self-occupied house property interest is not available.

5. Medical insurance premiums (Section 80D)
   

No deduction for health insurance premiums paid for self, spouse, children, or parents.

6. Education loan interest (Section 80E)
   

Deduction for interest paid on education loans is not allowed.

7. Savings account interest (Section 80TTA/80TTB)
   

Deduction for bank interest is not applicable.

👉 In short: the new regime exemption list is very small. The government’s intention is to move taxpayers away from complex deductions and towards a simpler, transparent system with lower rates and a higher tax-free threshold.

How do the recent tax slabs make deductions less important?

In earlier years, deductions like 80C and HRA were crucial, without them, salaried taxpayers would end up paying much higher taxes. But with the recent tax slab update in 2025, the picture has changed.

Here’s why:

• Zero tax up to ₹12–12.75 lakh
  

Thanks to the enhanced Section 87A rebate and the ₹75,000 standard deduction, most middle-class earners don’t need any extra deductions to escape taxes.

• Lower tax rates across brackets
  

Instead of steep jumps, the new slabs (5%, 10%, 15%, etc.) spread the tax load more evenly. Even without exemptions, the effective tax burden is lighter.

• Simplified compliance
  

Since you don’t have to submit investment proofs or rent receipts, filing your ITR is easier and faster.

👉 In short: Earlier, deductions were your weapon to cut down tax. Now, the slabs themselves are generous enough that most taxpayers don’t feel the pinch.

Who benefits most from the available deductions in the new regime?

Even though the new regime has fewer deductions, some groups of taxpayers still benefit significantly from the ones that remain:

1. Salaried employees and pensioners
   
   • They enjoy the ₹75,000 standard deduction, which directly reduces taxable income.
     
   • For many, this alone brings income into the zero-tax zone.
     
2. Employees with NPS contributions from employer
   
   • Employer contributions to NPS (Section 80CCD(2)) are still eligible for deduction, helping in both retirement planning and tax saving.
     
3. Employees with EPF contributions from employer
   
   • Employer’s share of EPF contributions remains tax-free within prescribed limits.
     
4. Businesses providing new employment
   
   • Employers can still claim under Section 80JJAA.
     

👉 Bottom line: While most individuals don’t need to chase deductions anymore, salaried taxpayers with NPS/EPF benefits from their employer are clear winners under the new system.

Conclusion

The new tax regime deductions may be limited compared to the old regime, but the government has balanced this by introducing lower slab rates and a much higher tax-free threshold, up to ₹12–12.75 lakh in FY 2025–26.

The most important relief for salaried individuals is the ₹75,000 standard deduction, along with employer-related benefits like NPS and EPF contributions. While popular deductions like 80C, 80D, and HRA are no longer available, the new system ensures simplicity and bigger take-home pay without the need for complex tax planning.

💡 Think of it this way: the old regime rewards investors, while the new regime rewards simplicity. If you’re salaried and fall within the middle-income group, chances are you’ll already pay little to no tax without needing to worry about deductions.

FAQs on New Tax Regime Deductions

1. What deductions are allowed under the new tax regime?

The main deductions are:

• Standard deduction of ₹75,000 (for salaried and pensioners)
  
• Employer’s contribution to NPS (Section 80CCD(2))
  
• Employer’s contribution to EPF (within limits)
  
• Certain allowances for specially-abled employees
  
• Deduction under Section 80JJAA (for businesses creating jobs)
  

2. What is the standard deduction in the new tax regime?

For FY 2025–26, salaried employees and pensioners can claim a flat ₹75,000 as a standard deduction.

3. What exemptions are not available in the new regime?

You cannot claim popular deductions like Section 80C (PPF, ELSS, LIC), 80D (medical insurance), HRA, LTA, education loan interest, or home loan interest.

4. Is income up to ₹12 lakh tax-free in the new regime?

Yes. Thanks to the Section 87A rebate, income up to ₹12 lakh is tax-free. For salaried taxpayers, the ₹75,000 standard deduction makes this limit ₹12.75 lakh.

5. Who benefits most from new tax regime deductions?

Salaried employees and pensioners (via the standard deduction) and those with employer contributions to NPS/EPF benefit the most.

6. Do I need to invest in 80C to save tax under the new regime?

No. Section 80C and similar deductions are not available under the new regime. Your tax savings come directly from lower slab rates and the rebate.

7. Is the new tax regime mandatory in 2025?

It is the default regime from FY 2025–26, but you can still choose the old regime when filing your ITR.