Tax · Guide
Old vs new tax regime for tax year 2026-27 - which saves more?
Tax year 2026-27 (April 2026 to March 2027) is the first year under the Income-tax Act, 2025. Budget 2026 kept the new-regime slabs introduced in Budget 2025, and the old regime still exists for those who want their deductions. Because the new slabs are so wide, the old regime now needs far more deductions to come out ahead than most people assume. Every figure below is calculated, not estimated.
On this page (7 sections)
Quick recap: how the two regimes differ
| Feature | New regime | Old regime |
|---|---|---|
| Standard deduction | Rs 75,000 | Rs 50,000 |
| Basic exemption | Rs 4,00,000 | Rs 2,50,000 |
| Highest slab starts at | Rs 24 lakh (30%) | Rs 10 lakh (30%) |
| Rebate makes tax nil up to | Rs 12 lakh taxable | Rs 5 lakh taxable |
| 80C, 80D, HRA, home loan interest | Not available | Available |
| Employer NPS contribution | Deductible (up to 14% of basic) | Deductible (up to 10% of basic) |
| Default regime | Yes | Must opt in |
Standard deduction
- New regime
- Rs 75,000
- Old regime
- Rs 50,000
Basic exemption
- New regime
- Rs 4,00,000
- Old regime
- Rs 2,50,000
Highest slab starts at
- New regime
- Rs 24 lakh (30%)
- Old regime
- Rs 10 lakh (30%)
Rebate makes tax nil up to
- New regime
- Rs 12 lakh taxable
- Old regime
- Rs 5 lakh taxable
80C, 80D, HRA, home loan interest
- New regime
- Not available
- Old regime
- Available
Employer NPS contribution
- New regime
- Deductible (up to 14% of basic)
- Old regime
- Deductible (up to 10% of basic)
Default regime
- New regime
- Yes
- Old regime
- Must opt in
Worked examples - four salary levels (tax year 2026-27)
| Profile | New regime tax | Old regime tax | Cheaper regime |
|---|---|---|---|
| Rs 10 lakh salary, no home loan (Rs 1.5L under 80C, Rs 25,000 health insurance (80D)) | Rs 0 | Rs 70,200 | New by Rs 70,200 |
| Rs 15 lakh salary, renting (Rs 1.5L 80C, Rs 25,000 80D, Rs 1L exempt HRA) | Rs 97,500 | Rs 1,71,600 | New by Rs 74,100 |
| Rs 20 lakh salary, home loan + HRA (Rs 2L home-loan interest, Rs 1.5L 80C, Rs 50,000 80D, Rs 2.4L HRA, Rs 50,000 NPS) | Rs 1,92,400 | Rs 1,98,120 | New by Rs 5,720 |
| Rs 30 lakh salary, home loan + HRA (Rs 2L home-loan interest, Rs 1.5L 80C, Rs 50,000 80D, Rs 3L HRA, Rs 50,000 NPS) | Rs 4,75,800 | Rs 4,91,400 | New by Rs 15,600 |
Rs 10 lakh salary, no home loan (Rs 1.5L under 80C, Rs 25,000 health insurance (80D))
- New regime tax
- Rs 0
- Old regime tax
- Rs 70,200
- Cheaper regime
- New by Rs 70,200
Rs 15 lakh salary, renting (Rs 1.5L 80C, Rs 25,000 80D, Rs 1L exempt HRA)
- New regime tax
- Rs 97,500
- Old regime tax
- Rs 1,71,600
- Cheaper regime
- New by Rs 74,100
Rs 20 lakh salary, home loan + HRA (Rs 2L home-loan interest, Rs 1.5L 80C, Rs 50,000 80D, Rs 2.4L HRA, Rs 50,000 NPS)
- New regime tax
- Rs 1,92,400
- Old regime tax
- Rs 1,98,120
- Cheaper regime
- New by Rs 5,720
Rs 30 lakh salary, home loan + HRA (Rs 2L home-loan interest, Rs 1.5L 80C, Rs 50,000 80D, Rs 3L HRA, Rs 50,000 NPS)
- New regime tax
- Rs 4,75,800
- Old regime tax
- Rs 4,91,400
- Cheaper regime
- New by Rs 15,600
How much do you need to deduct before the old regime wins?
| Gross salary | New regime tax | Old-regime deductions needed to break even |
|---|---|---|
| Rs 10,00,000 | Rs 0 | Rs 4,51,000 |
| Rs 12,75,000 | Rs 0 | Rs 7,26,000 |
| Rs 15,00,000 | Rs 97,500 | Rs 5,45,000 |
| Rs 20,00,000 | Rs 1,92,400 | Rs 7,09,000 |
| Rs 25,00,000 | Rs 3,19,800 | Rs 8,01,000 |
| Rs 30,00,000 | Rs 4,75,800 | Rs 8,01,000 |
| Rs 50,00,000 | Rs 10,99,800 | Rs 8,01,000 |
Rs 10,00,000
- New regime tax
- Rs 0
- Old-regime deductions needed to break even
- Rs 4,51,000
Rs 12,75,000
- New regime tax
- Rs 0
- Old-regime deductions needed to break even
- Rs 7,26,000
Rs 15,00,000
- New regime tax
- Rs 97,500
- Old-regime deductions needed to break even
- Rs 5,45,000
Rs 20,00,000
- New regime tax
- Rs 1,92,400
- Old-regime deductions needed to break even
- Rs 7,09,000
Rs 25,00,000
- New regime tax
- Rs 3,19,800
- Old-regime deductions needed to break even
- Rs 8,01,000
Rs 30,00,000
- New regime tax
- Rs 4,75,800
- Old-regime deductions needed to break even
- Rs 8,01,000
Rs 50,00,000
- New regime tax
- Rs 10,99,800
- Old-regime deductions needed to break even
- Rs 8,01,000
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Simple decision rules
- Add up every deduction you can genuinely claim under the old regime and compare it with the break-even figure for your salary above - or enter your numbers in our old vs new tax regime calculator.
- Salary up to Rs 12.75 lakh: pick the new regime - your tax is nil.
- Salary above Rs 25 lakh: the old regime only wins if your deductions exceed about Rs 8,01,000. A self-occupied home loan (Rs 2L) plus full 80C (Rs 1.5L), 80D and NPS usually still falls short unless HRA is large.
- Just above Rs 12 lakh of taxable income, marginal relief means your new-regime tax cannot exceed the income above Rs 12 lakh - so a small raise never leaves you worse off.
How to choose your regime
Frequently asked questions
Sources & references
- Income Tax Department - tax calculator and regime FAQs — Income Tax Department, GoI
- Provisions of the Income-tax Act, 1961 vis-a-vis Income-tax Act, 2025 — CBDT
- Union Budget 2026-27 — Ministry of Finance, GoI
Rates, fees, eligibility, and product terms cited on this page reflect the sources above at the time of publication and may have changed since. Always verify directly with the lender or regulator.