Every year salaried people face the same choice: stay in the new tax regime, which is the default, or opt for the old one. The old regime lets you deduct things like tax-saving investments, health insurance, home-loan interest and the HRA exemption. The new one has lower slab rates but allows almost none of those deductions.
So the question is simple: are your deductions big enough to make up for the old regime’s higher rates? For most incomes there is one number of deductions where the two regimes charge the same tax. Below it, the new regime wins. Above it, the old one does.
The rules for 2026-27
The slabs, standard deduction and rebate are the same as last year. The 2026 Budget left them unchanged.
- New regime: nil up to ₹4 lakh, then 5%, 10%, 15%, 20% and 25% in steps of ₹4 lakh, and 30% above ₹24 lakh. Standard deduction on salary ₹75,000. No tax at all up to ₹12 lakh of taxable income.
- Old regime: nil up to ₹2.5 lakh, 5% to ₹5 lakh, 20% to ₹10 lakh, 30% above. Standard deduction ₹50,000. No tax up to ₹5 lakh of taxable income.
- Both add 4% health and education cess.
| Taxable income | New regime | Old regime |
|---|---|---|
| Up to ₹2.5 lakh | Nil | Nil |
| ₹2.5 lakh to ₹4 lakh | Nil | 5% |
| ₹4 lakh to ₹5 lakh | 5% | 5% |
| ₹5 lakh to ₹8 lakh | 5% | 20% |
| ₹8 lakh to ₹10 lakh | 10% | 20% |
| ₹10 lakh to ₹12 lakh | 10% | 30% |
| ₹12 lakh to ₹16 lakh | 15% | 30% |
| ₹16 lakh to ₹20 lakh | 20% | 30% |
| ₹20 lakh to ₹24 lakh | 25% | 30% |
| Above ₹24 lakh | 30% | 30% |
On taxable income, after the standard deduction. Add 4% cess. Rebates make tax nil up to ₹12 lakh (new) and ₹5 lakh (old).
These are for residents below 60 with income up to ₹50 lakh, where no surcharge applies. The sources are on the calculator page.
Three salaries, worked through
₹10 lakh salary, ₹2 lakh of deductions. Under the new regime, taxable income is ₹9.25 lakh, which is under ₹12 lakh, so the tax is nil. Under the old regime, taxable income is ₹7.5 lakh and the tax is ₹65,000. Here the old regime can never win: even if your deductions brought its tax to nil, it would only tie.
₹15 lakh salary, ₹2.5 lakh of deductions. New regime: taxable ₹14.25 lakh, tax ₹97,500. Old regime: taxable ₹12 lakh, tax ₹1,79,400. The old regime only wins if your deductions are above ₹5,43,750.
₹20 lakh salary, ₹3.75 lakh of deductions. New regime: ₹1,92,400. Old regime: ₹2,96,400. The old regime needs deductions above ₹7,08,333 to win.
| Salary | Deductions | New regime tax | Old regime tax | Old wins above |
|---|---|---|---|---|
| ₹10 lakh | ₹2 lakh | Nil | ₹65,000 | Never |
| ₹15 lakh | ₹2.5 lakh | ₹97,500 | ₹1,79,400 | ₹5,43,750 |
| ₹20 lakh | ₹3.75 lakh | ₹1,92,400 | ₹2,96,400 | ₹7,08,333 |
Tax with 4% cess, before rounding. The last column is the deductions the old regime needs to charge less.
- Deductions the old regime needs to win
Salary
See the numbers
| Salary | Deductions the old regime needs to win |
|---|---|
| ₹10 lakh | Old cannot win |
| ₹10.5 lakh | Old cannot win |
| ₹11 lakh | Old cannot win |
| ₹11.5 lakh | Old cannot win |
| ₹12 lakh | Old cannot win |
| ₹12.5 lakh | Old cannot win |
| ₹13 lakh | ₹6.88 lakh |
| ₹13.5 lakh | ₹5.06 lakh |
| ₹14 lakh | ₹5.19 lakh |
| ₹14.5 lakh | ₹5.31 lakh |
| ₹15 lakh | ₹5.44 lakh |
| ₹15.5 lakh | ₹5.56 lakh |
| ₹16 lakh | ₹5.69 lakh |
| ₹16.5 lakh | ₹5.88 lakh |
| ₹17 lakh | ₹6.08 lakh |
| ₹17.5 lakh | ₹6.25 lakh |
| ₹18 lakh | ₹6.42 lakh |
| ₹18.5 lakh | ₹6.58 lakh |
| ₹19 lakh | ₹6.75 lakh |
| ₹19.5 lakh | ₹6.92 lakh |
| ₹20 lakh | ₹7.08 lakh |
| ₹20.5 lakh | ₹7.25 lakh |
| ₹21 lakh | ₹7.38 lakh |
| ₹21.5 lakh | ₹7.46 lakh |
| ₹22 lakh | ₹7.54 lakh |
| ₹22.5 lakh | ₹7.63 lakh |
| ₹23 lakh | ₹7.71 lakh |
| ₹23.5 lakh | ₹7.79 lakh |
| ₹24 lakh | ₹7.88 lakh |
| ₹24.5 lakh | ₹7.96 lakh |
| ₹25 lakh | ₹8.00 lakh |
| ₹25.5 lakh | ₹8.00 lakh |
| ₹26 lakh | ₹8.00 lakh |
| ₹26.5 lakh | ₹8.00 lakh |
| ₹27 lakh | ₹8.00 lakh |
| ₹27.5 lakh | ₹8.00 lakh |
| ₹28 lakh | ₹8.00 lakh |
| ₹28.5 lakh | ₹8.00 lakh |
| ₹29 lakh | ₹8.00 lakh |
| ₹29.5 lakh | ₹8.00 lakh |
| ₹30 lakh | ₹8.00 lakh |
If your deductions are above the line, the old regime charges less. There is no line up to ₹12.5 lakh, where the new regime charges no tax. The bump near ₹13 lakh is marginal relief.
All three include the 4% cess, before the final rounding to the nearest ten rupees.
Try it
Your salary, both regimes
- New regime tax
- ₹97,500
- Old regime tax
- ₹1,79,400
The new regime saves you ₹81,900 a year.
What counts as a deduction
For the old regime, add up everything you would actually claim beyond the standard deduction: tax-saving investments and insurance, health insurance, home-loan interest, the HRA exemption and the like. Each has its own limit under the tax rules, so count only what you can really claim. For most people the honest total is well below the break-even numbers above, which is why the new regime usually wins.
Before you choose
- The new regime is the default. To use the old one, you have to choose it, at the latest when you file your return. Tell your employer early so the right tax is deducted each month.
- Some people can switch every year and some cannot. It depends on what kind of income you have, so check before you plan around switching.
- Don’t buy products just for the deduction. If an investment or policy only makes sense because of the tax saving, run the numbers with and without it.
Put in your own salary and deductions in the tax regime calculator. It shows both taxes step by step and the deductions the old regime would need.
For education only. Not investment, tax or insurance advice. Examples use the figures stated in the guide; check your own before you act.