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Old vs New Tax Regime in TY 2026-27: Which Saves You More?

For most salaried people under ₹13 lakh, the new regime wins without paperwork. Above that it depends on your deductions. Here's the exact break-even.

SourcedSource: Income-tax Act, 2025 read with Finance Act, 2026Compiled 1 July 2026CA review in progress: how verification works

The verdict tool · TY 2026-27

Which regime wins on your numbers?

Enter what you earn and everything you could claim under the old regime. We run both regimes in full (slabs, rebate, marginal relief, surcharge, cess) and tell you which one keeps more of your money.

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Against the old regime with ₹2,00,000 of deductions,

the new regime saves you ₹1,13,100

That's about ₹9,425 a month.

The old regime only wins if your old-regime deductions exceed ₹5,68,750 a year; you entered ₹2,00,000.

Lower tax

New regime

₹1,13,100

Saves you ₹1,13,100

Taxable income₹15,25,000
Deductions counted₹75,000 (standard)
Effective rate7.1%
Tax per month₹9,425
Take-home per year₹14,86,900
Take-home per month₹1,23,908

Old regime

₹2,26,200

Taxable income₹13,50,000
Deductions counted₹2,50,000
Effective rate14.1%
Tax per month₹18,850
Take-home per year₹13,73,800
Take-home per month₹1,14,483
Show the full working, line by line
LineNew regimeOld regime
Gross income₹16,00,000₹16,00,000
Standard deduction− ₹75,000− ₹50,000
Other deductions− ₹0− ₹2,00,000
Taxable income₹15,25,000₹13,50,000
Tax by slab₹1,08,750₹2,17,500
Rebate (Sec 156†, old 87A)− ₹0− ₹0
Surcharge+ ₹0+ ₹0
Cess (4%)+ ₹4,350+ ₹8,700
Total tax₹1,13,100₹2,26,200
Effective rate7.1%14.1%
Per month₹9,425₹18,850

Itemise your deductions in the full calculator (80C, 80D, HRA, home loan) →

Same engine as our income-tax calculator. TY 2026-27; ordinary income only (no capital gains or business income). Old-regime deductions apply on top of the standard deduction; employer NPS counts in both regimes. Take-home means income minus this tax, before PF and other payroll cuts. Includes the rebate, marginal relief, surcharge and 4% cess. Runs in your browser with no account or sign-up; the full-calculator link carries your inputs in its address so they arrive pre-filled. Slab data compiled 1 July 2026, CA review in progress. † 2025-Act section number pending verification against the Gazette text.

What each regime charges, and what it lets you claim

The new regime charges less per slab but lets you deduct almost nothing. The old regime charges more, then hands you a basket of deductions to claw it back.

What mattersNew regimeOld regime
Zero-tax ceilingVia the Sec 156† rebate (old 87A)₹12,00,000₹12,75,000 of salary once the standard deduction is in. Marginal relief cushions incomes just above the line.₹5,00,000Rebate capped at ₹12,500.
Standard deductionSalaried and pensioners₹75,000₹50,000
80C basketEPF, PPF, ELSS, LIC (up to ₹1,50,000)NoYes
80DHealth-insurance premiumNoYes
HRA exemptionRent paid against house rent allowanceNoYes
Home-loan interest 24(b)Self-occupied houseNoYesUp to ₹2,00,000 a year.
NPS (employer contribution)To your pension accountYesYes
Surcharge capOn incomes above ₹50 lakh25%Top slab all-in about 39%.37%Above ₹5 crore. Top slab all-in about 42.7%.
Default statusDefaultApplies automatically unless you opt out.Opt-inYou must actively choose it each time.

Source: Income-tax Act, 2025 read with Finance Act, 2026 · compiled 1 July 2026, CA review in progress. We use the familiar 1961-Act names (80C, 87A, 24(b)) throughout. Under the 2025 Act they have new section numbers, pending verification against the Gazette text (†). Map any section.

The break-even: what old needs to beat new

One number decides this whole debate. For each salary below: the tax under both regimes, and the deductions the old regime needs (beyond its ₹50,000 standard deduction) before it draws level. Computed with the same engine as the tool above.

Annual salaryNew-regime taxOld-regime tax(zero deductions)Deductions old needs to win
₹8,00,000₹0₹65,000Can't win: new is already ₹0
₹10,00,000₹0₹1,06,600Can't win: new is already ₹0
₹12,00,000₹0₹1,63,800Can't win: new is already ₹0
₹15,00,000₹97,500₹2,57,400₹5,43,750+
₹18,00,000₹1,50,800₹3,51,000₹6,41,667+
₹20,00,000₹1,92,400₹4,13,400₹7,08,334+
₹24,00,000₹2,92,500₹5,38,200₹7,87,500+
₹30,00,000₹4,75,800₹7,25,400₹8,00,000+
₹50,00,000₹10,99,800₹13,49,400₹8,00,000+

Salaried individual below 60; standard deduction applied on both sides (₹75,000 new / ₹50,000 old); includes rebate, marginal relief and 4% cess. Break-even is the exact rupee of deductions where both regimes charge the same tax, solved against the engine; deduct more than that and the old regime wins. Source: Income-tax Act, 2025 read with Finance Act, 2026 · compiled 1 July 2026, CA review in progress.

Notice the plateau. At a ₹24 lakh salary with zero deductions, the regimes sit ₹2,45,700 apart. Once your salary crosses about ₹24.75 lakh, both regimes tax the top rupee at 30%, so the break-even freezes at ₹8,00,000 of deductions all the way to ₹50 lakh (beyond that, surcharge nudges it). Getting there honestly takes the full ₹1,50,000 80C basket, the ₹2,00,000 home-loan interest cap, a serious HRA claim and more. Most people never do.

How to switch, or stay put

The new regime is the default. Nobody needs to do anything to be in it. Switching out is easy for salaried people and a one-way door for business owners.

Everyone

Do nothing, get the new regime

Since it became the default, the new regime applies automatically. Your employer deducts TDS on new-regime slabs unless you tell them otherwise, and your return is assessed the same way.

If the tool above says new wins for you (and for most people it does), you're already done.

Salaried

Salaried? Pick freely, every year

Your employer asks for your choice at the start of the year, but that only decides how much TDS comes out of each payslip. The real decision happens when you file: the ITR form lets you pick either regime, whatever you told your employer.

Picked wrong in April? Fix it at filing and the difference comes back as a refund. You can flip again next year. No forms, just a tick-box.

Business income

Business income? Mind the one-way door

If you have business or professional income (freelancing counts), opting into the old regime means filing Form 10-IEA before your return's due date.

And the switch is rationed: you can return to the new regime whenever you like, but once you do, you can never opt for the old regime again. One exit, once in a lifetime. Run the numbers before you use it.

Two worked examples: ₹14 lakh and ₹11 lakh

Real inputs under both regimes, with nothing skipped. Punch either one into the tool above and bend the numbers yourself.

₹14 lakh · full paperwork

Rohit claims ₹3.2 lakh in deductions. Old regime wins, right?

Annual salary₹14,00,000
Section 80C (EPF + ELSS)₹1,50,000
Section 80D (health cover)₹40,000
HRA exemption₹1,30,000
Old-regime deductions, total₹3,20,000
New regime₹81,900
Old regime₹1,26,360

Wrong. The new regime still wins, by ₹44,460. At ₹14 lakh, old needs ₹5,18,750 of deductions just to draw level. Even pushing to ₹5,20,000 (his existing claims plus the entire ₹2,00,000 home-loan interest cap), old wins by only ₹260.

New: taxable ₹13,25,000 → ₹78,750 by slab, plus cess. Old: taxable ₹10,30,000 → ₹1,21,500 by slab, plus cess.

₹11 lakh · no paperwork at all

Sana claims nothing. What does each regime charge her?

Annual salary₹11,00,000
Section 80C₹0
Other deductions₹0
Old-regime deductions, total₹0
New regime₹0
Old regime₹1,32,600

New regime: zero tax. Her taxable income of ₹10,25,000 sits inside the ₹12,00,000 rebate ceiling, so the Sec 156† rebate wipes the bill. The old regime would charge ₹1,32,600 for the identical salary.

New: taxable ₹10,25,000 → slab tax fully rebated. Old: taxable ₹10,50,000 → ₹1,27,500 by slab, plus cess.

Questions people actually ask

Which regime am I in if I do nothing?

The new one. It has been the default since FY 2023-24 and stays the default under the Income-tax Act 2025. Your employer deducts TDS on new-regime slabs unless you hand in a declaration choosing old, and your return is processed on new-regime rules unless you actively opt out.

Can I switch between regimes every year?

Salaried with no business income: yes. You pick afresh in each year's ITR, regardless of what you told your employer in April. Business or professional income: once. You opt out of the new regime with Form 10-IEA; after you return to it, the old regime is closed to you for good.

My taxable income is ₹12.5 lakh. Do I lose the whole rebate?

No. Marginal relief caps the damage: you never pay more tax than the amount by which your taxable income exceeds ₹12 lakh. At ₹12,50,000 that means ₹50,000 plus cess (₹52,000 in total) instead of the ₹70,200 (₹67,500 of slab tax plus 4% cess) you would owe without it. The cliff people fear is actually a ramp.

Which deductions still work in the new regime?

Fewer than you'd like, but not zero. The ₹75,000 standard deduction applies if you earn a salary, and your employer's NPS contribution stays deductible. What you give up: the 80C basket, 80D health premiums, HRA, and home-loan interest on a self-occupied house. That trade is the entire old-vs-new question.

Does the ₹12 lakh zero-tax ceiling cover capital gains?

No. The rebate applies to income taxed at slab rates (salary, interest, rent). Income taxed at special rates sits outside it: equity LTCG at 12.5%, equity STCG at 20%, crypto at a flat 30%. Sell shares at a profit and that tax is payable even when your salary alone would have been tax-free.

The full slab tables for TY 2026-27, both regimesIncome-tax calculator: your full bill, slab by slabCapital gains rates: what the rebate doesn't cover

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