Every year from April to July, "old vs new tax regime which is better" is India's most-searched tax question. For FY 2026-27 (tax year 2026-27 under the new Act) the answer is more lopsided than ever: the new regime wins for most people unless deductions are very large.
The slabs side by side
| Taxable income | New regime (default) | Old regime |
|---|---|---|
| Up to ₹2.5 lakh | Nil | Nil |
| ₹2.5–4 lakh | Nil | 5% |
| ₹4–5 lakh | 5% | 5% |
| ₹5–8 lakh | 5% | 20% |
| ₹8–10 lakh | 10% | 20% |
| ₹10–12 lakh | 10% | 30% |
| ₹12–16 lakh | 15% | 30% |
| ₹16–20 lakh | 20% | 30% |
| ₹20–24 lakh | 25% | 30% |
| Above ₹24 lakh | 30% | 30% |
Plus 4% cess on both; surcharge above ₹50 lakh (capped at 25% in the new regime, 37% in the old).
Rebate (87A / new s.156): new regime — tax nil if taxable income ≤ ₹12 lakh (rebate up to ₹60,000, with marginal relief just above). Old regime — nil if taxable income ≤ ₹5 lakh.
Standard deduction (salaried/pensioners): ₹75,000 new, ₹50,000 old.
Old-regime-only deductions: 80C (₹1.5L), 80D, 80CCD(1B) NPS ₹50k, HRA exemption, home-loan interest ₹2L, 80E, 80G, 80TTA, LTA, professional tax.
Both regimes: employer NPS 80CCD(2), standard deduction, family-pension deduction.
The break-even table (salaried, below 60)
The deduction total (excluding the standard deduction) beyond which the old regime gives lower tax:
| Gross salary | Old regime wins if deductions ≥ |
|---|---|
| ₹8 lakh | Never |
| ₹10 lakh | Never |
| ₹12.75 lakh | Never (new regime is zero tax) |
| ₹15 lakh | ≈ ₹5.6 lakh |
| ₹18 lakh | ≈ ₹5.9 lakh |
| ₹20 lakh | ≈ ₹5.9 lakh |
| ₹25 lakh | ≈ ₹6.4 lakh |
| ₹30 lakh | ≈ ₹6.7 lakh |
| ₹50 lakh | ≈ ₹7.2 lakh |
Get your exact number from the old vs new calculator; it computes the break-even for your income and age.
Who typically beats the break-even
- Home-loan borrowers in metros: interest ₹2 lakh + HRA exemption ₹1.5–3 lakh + 80C ₹1.5 lakh + 80D ₹25k ≈ ₹5.5–7 lakh → old regime can win above ₹18–20 lakh salary.
- High-rent tenants with high basic — check the HRA exemption.
- Senior citizens with 80D (₹50k), 80TTB (₹50k) and medical insurance for parents.
Everyone else: new regime.
Switching rules
| Salaried / no business income | Business or professional income | |
|---|---|---|
| Choose regime | Every year, at filing (declare to employer for TDS) | Opt out of new regime via Form 10-IEA before due date |
| Switch back | Freely each year | Can return to new regime only once; then locked |
Tell your employer early
Your employer deducts TDS based on your declared regime. If you don't declare, the new regime applies by default. Declaring old and then filing new is allowed, but you'll have paid excess TDS and wait for a refund. If you have business income and advance tax to pay, schedule it with the advance tax calculator.
Quick decision rule
- Add up your genuine old-regime deductions (don't count investments you wouldn't otherwise make).
- If the total is below ₹5 lakh, choose new.
- If above, run both in the calculator — and remember you can re-check next year.
FAQ
Is the new regime compulsory?
No. It is the default, but you can opt for the old regime while filing (or via Form 10-IEA if you have business income).
I earn ₹13 lakh. Do I pay tax on the full amount above ₹12 lakh?
No. With the ₹75,000 standard deduction your taxable income is ₹12.25 lakh, and marginal relief limits tax to the amount by which taxable income exceeds ₹12 lakh — ₹25,000 plus cess.
Can I claim HRA in the new regime?
No. HRA exemption is available only under the old regime.
Does the old regime still have the ₹2.5 lakh basic exemption?
Yes (₹3 lakh for 60–80, ₹5 lakh for 80+). It has not been revised since 2014.