·5 min read·Guides
Old vs New Tax Regime for 2026-27: Which Is Better? (Break-Even Table)
Old or new tax regime for FY 2026-27, worked out at ₹8, 10, 12, 15, 20 and 25 lakh salaries: the tax under each, how much in deductions you need before the old regime wins, and a quick way to decide.
For most salaried people the new regime is better in 2026-27. Up to ₹12.75 lakh salary it is tax-free (₹12 lakh rebate plus the ₹75,000 standard deduction), and above that the old regime only wins if your deductions are large: about ₹5.4 lakh at a ₹15 lakh salary, ₹7.1 lakh at ₹20 lakh and ₹8 lakh from about ₹25 lakh upwards. Deductions that big usually need HRA on a high rent plus a home loan on top of 80C, 80D and NPS. Add up your real deductions and compare both in a calculator before you tell your employer.
Do it now, free and without uploading anything: Income Tax Calculator (Old vs New Regime), Rent Receipt Generator.
Every April your employer asks which tax regime you want for the year, and the choice decides how much TDS comes out of each salary. For 2026-27 the rules are the same as last year, so the answer is mostly about how much you can claim in deductions. Here are the numbers.
The two regimes in one table
| New regime (default) | Old regime | |
|---|---|---|
| Tax-free up to | ₹12 lakh taxable income (₹12.75 lakh salary), through the rebate | ₹5 lakh taxable income, through the rebate |
| Standard deduction | ₹75,000 | ₹50,000 |
| HRA, 80C, 80D, home loan interest | Not allowed | Allowed |
| Employer's NPS contribution | Allowed | Allowed |
| Slabs | Nil to ₹4 lakh, then 5% to 30% in ₹4 lakh steps | Nil to ₹2.5 lakh, 5%, 20%, then 30% above ₹10 lakh |
New regime slabs for 2026-27
| Taxable income | Rate |
|---|---|
| Up to ₹4 lakh | Nil |
| ₹4 to 8 lakh | 5% |
| ₹8 to 12 lakh | 10% |
| ₹12 to 16 lakh | 15% |
| ₹16 to 20 lakh | 20% |
| ₹20 to 24 lakh | 25% |
| Above ₹24 lakh | 30% |
A rebate cancels the tax completely if taxable income is ₹12 lakh or less, and marginal relief stops a small amount over ₹12 lakh from costing more than that amount. Cess of 4% applies on top.
Old regime slabs (below 60)
| Taxable income | Rate |
|---|---|
| Up to ₹2.5 lakh | Nil |
| ₹2.5 to 5 lakh | 5% |
| ₹5 to 10 lakh | 20% |
| Above ₹10 lakh | 30% |
The basic exemption is ₹3 lakh from age 60 and ₹5 lakh from age 80. Income up to ₹5 lakh after deductions is tax-free through the rebate.
Tax at common salaries
Total tax including 4% cess, for a salaried person below 60, with the standard deduction applied in both regimes. "Deductions" means everything you claim in the old regime: HRA exemption, 80C, 80D, home loan interest and so on.
| Salary | New regime | Old, no deductions | Old, ₹1.5 lakh | Old, ₹3.75 lakh | Old, ₹5 lakh |
|---|---|---|---|---|---|
| ₹8 lakh | ₹0 | ₹65,000 | ₹33,800 | ₹0 | ₹0 |
| ₹10 lakh | ₹0 | ₹1,06,600 | ₹75,400 | ₹28,600 | ₹0 |
| ₹12 lakh | ₹0 | ₹1,63,800 | ₹1,17,000 | ₹70,200 | ₹44,200 |
| ₹15 lakh | ₹97,500 | ₹2,57,400 | ₹2,10,600 | ₹1,40,400 | ₹1,06,600 |
| ₹20 lakh | ₹1,92,400 | ₹4,13,400 | ₹3,66,600 | ₹2,96,400 | ₹2,57,400 |
| ₹25 lakh | ₹3,19,800 | ₹5,69,400 | ₹5,22,600 | ₹4,52,400 | ₹4,13,400 |
Even ₹5 lakh of deductions does not beat the new regime at any of these salaries except ₹8 and ₹10 lakh, where both come to zero.
The break-even: how much you need to claim
The old regime wins only when your deductions are at least:
| Salary | Deductions needed for the old regime to cost less or the same |
|---|---|
| ₹8 lakh | ₹2.5 lakh |
| ₹10 lakh | ₹4.5 lakh |
| ₹12 lakh | ₹6.5 lakh |
| ₹15 lakh | ₹5.44 lakh |
| ₹18 lakh | ₹6.42 lakh |
| ₹20 lakh | ₹7.09 lakh |
| ₹24 lakh | ₹7.88 lakh |
| ₹25 lakh and above | ₹8 lakh |
The ₹12 lakh figure is high because the new regime is completely tax-free there. From about ₹24.75 lakh salary, both regimes tax every extra rupee at 30%, so the break-even stays at ₹8 lakh.
What can you realistically claim?
| Deduction (old regime) | Typical maximum |
|---|---|
| 80C: EPF, PPF, ELSS, life insurance, tuition fees, home loan principal | ₹1.5 lakh |
| 80D: health insurance for yourself and family | ₹25,000 (₹50,000 if 60+) |
| 80D: health insurance for parents | ₹25,000 (₹50,000 if they are 60+) |
| 80CCD(1B): your own NPS contribution | ₹50,000 |
| Home loan interest on a self-occupied house | ₹2 lakh |
| HRA exemption | Depends on rent and salary: see how HRA is calculated |
Without HRA or a home loan, most people top out around ₹2.25 lakh (a full 80C, ₹25,000 of health insurance and ₹50,000 of NPS). That is just short of the ₹2.5 lakh break-even even at an ₹8 lakh salary. To reach ₹5 to 8 lakh you usually need both a large HRA exemption (high rent in a metro) and home loan interest, on top of a full 80C.
From April 2026 the Income-tax Act, 2025 replaced the 1961 Act and renumbered its sections, so you will see new section numbers on forms. The deductions themselves carried over; the familiar names (80C, 80D) are used above because that is how most people and employers still refer to them.
How to decide in two minutes
- Salary up to ₹12.75 lakh: choose the new regime. You pay nothing.
- Above that: add up what you will really claim this year: HRA exemption, 80C, 80D, NPS and home loan interest.
- Compare with the break-even table. If your total is below the figure for your salary, choose the new regime.
- Check with real numbers in the income tax calculator, which works out both regimes side by side and shows which is cheaper.
Common mistakes
- Choosing the old regime "for the deductions" without adding them up. Below the break-even it simply costs more.
- Counting investments you will not actually make. Your employer deducts TDS from the declaration, and a shortfall becomes tax due at filing.
- Forgetting HRA paperwork. If you choose the old regime for HRA, you need rent receipts and, above ₹1 lakh rent a year, your landlord's PAN. The rent receipt generator makes a year of receipts in one go.
- Assuming the employer's choice is final. Salaried people can still pick the other regime when filing the return; the difference is settled as a refund or tax due.
This is general information for resident salaried individuals below 60, with figures rounded as the tax department does. It is not tax advice; capital gains and other special-rate income are taxed separately. Check your own figures with a tax adviser if you are close to the break-even.