For most salaried people in tax year 2026-27, the new regime is cheaper. Salary up to ₹12.75 lakh pays no tax at all, and the slabs are lower all the way up. The old regime wins only if your deductions are large. For most salaries above ₹10 lakh, that means ₹4.5–8 lakh of HRA, 80C, 80D, NPS and home-loan interest.
This guide gives you both sets of slabs, shows the maths on four real salaries, and explains how to find your own break-even point. You can run your own numbers in our old vs new regime tax calculator as you read.
Note: From 1 April 2026 the Income-tax Act, 2025 replaced the 1961 Act. It says "tax year 2026-27" instead of FY/AY, so tax year 2026-27 is what used to be FY 2026-27 / AY 2027-28. Section numbers changed too. We still say 80C, 80D and so on, because those are the old Act's numbers that everyone knows.
Tools used in this guide
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Tax slabs for tax year 2026-27
Budget 2026 made no change to the slabs, the rebate or the standard deduction. The structure from Budget 2025 carries on.
New regime (the default)
| Taxable income | Rate |
|---|---|
| Up to ₹4,00,000 | Nil |
| ₹4,00,001 – ₹8,00,000 | 5% |
| ₹8,00,001 – ₹12,00,000 | 10% |
| ₹12,00,001 – ₹16,00,000 | 15% |
| ₹16,00,001 – ₹20,00,000 | 20% |
| ₹20,00,001 – ₹24,00,000 | 25% |
| Above ₹24,00,000 | 30% |
Salaried people and pensioners get a ₹75,000 standard deduction.
Old regime (you have to opt in)
| Taxable income (below 60) | Rate |
|---|---|
| Up to ₹2,50,000 | Nil |
| ₹2,50,001 – ₹5,00,000 | 5% |
| ₹5,00,001 – ₹10,00,000 | 20% |
| Above ₹10,00,000 | 30% |
Seniors aged 60–79 pay nil up to ₹3,00,000, and those 80 and above pay nil up to ₹5,00,000. The standard deduction is ₹50,000, and taxable income up to ₹5,00,000 is tax-free through the old rebate (up to ₹12,500).
Both regimes add 4% health and education cess on the tax. Surcharge applies above ₹50 lakh (10%, rising to 15% above ₹1 crore and 25% above ₹2 crore). The old regime goes up to 37% above ₹5 crore, while the new regime stops at 25%.
The ₹12 lakh rebate and marginal relief
In the new regime, a resident individual whose total income is ₹12,00,000 or less pays no tax. The rebate is up to ₹60,000, which is exactly the slab tax on ₹12 lakh. Add the ₹75,000 standard deduction and a salary of ₹12,75,000 comes out tax-free.
Just above ₹12 lakh there's a cliff, so the law adds marginal relief. Your tax (before cess) can't be more than the income above ₹12,00,000.
Take a ₹13,00,000 salary:
- Taxable income: ₹13,00,000 − ₹75,000 = ₹12,25,000
- Slab tax: ₹20,000 + ₹40,000 + ₹3,750 = ₹63,750
- Income above ₹12 lakh is only ₹25,000, so tax is capped at ₹25,000 (relief of ₹38,750)
- Add 4% cess of ₹1,000: total ₹26,000
Marginal relief fades out as income rises. Somewhere a little above ₹12.7 lakh of taxable income, normal slab tax becomes the smaller figure again.
Warning: The rebate doesn't cover special-rate income such as listed-share capital gains. If you have those, your tax won't be zero even below ₹12 lakh. Our calculator assumes all income is taxed at slab rates.
Deductions only the old regime allows
The old regime has higher slabs but lets you subtract a long list of deductions. The new regime allows almost none of them.
| Deduction (old Act name) | Old regime | New regime |
|---|---|---|
| Standard deduction | ₹50,000 | ₹75,000 |
| HRA exemption | Yes | No |
| 80C (PPF, ELSS, EPF, life cover, tuition, home-loan principal) | Up to ₹1,50,000 | No |
| 80D health insurance | ₹25,000 self/family (₹50,000 if senior) + parents ₹25,000/₹50,000 | No |
| 80CCD(1B) own NPS | Extra ₹50,000 | No |
| Home-loan interest, self-occupied house | Up to ₹2,00,000 | No |
| 80TTA savings interest | Up to ₹10,000 (80TTB ₹50,000 for seniors) | No |
| 80E education-loan interest | No cap | No |
| Employer's NPS contribution | Yes | Yes, up to 14% of basic + DA |
If you pay rent, the HRA calculator tells you how much of your HRA is exempt. That's often the biggest single deduction for people in rented flats.
Worked examples: ₹8 L, ₹12.75 L, ₹15 L and ₹25 L
All four assume a resident below 60, salary as the only income, and tax rounded to the nearest ₹10. These are the same figures our tax calculator shows.
₹8 lakh, no deductions
- New: ₹8,00,000 − ₹75,000 = ₹7,25,000. Slab tax ₹16,250, fully cancelled by the rebate. Tax: ₹0.
- Old: ₹8,00,000 − ₹50,000 = ₹7,50,000. Slab tax ₹62,500 + cess ₹2,500. Tax: ₹65,000.
You'd need ₹2,50,000 of deductions just to bring the old regime down to zero.
₹12.75 lakh, no deductions
- New: taxable ₹12,00,000, slab tax ₹60,000, rebate ₹60,000. Tax: ₹0.
- Old: taxable ₹12,25,000, slab tax ₹1,80,000 + cess ₹7,200. Tax: ₹1,87,200.
₹15 lakh with 80C, 80D and HRA
Basic pay is ₹6,00,000. HRA received is ₹2,40,000 and rent is ₹2,40,000 a year in a metro. The HRA exemption works out to ₹1,80,000 (rent minus 10% of basic is the smallest of the three tests). Add 80C of ₹1,50,000 and 80D of ₹25,000, and deductions total ₹3,55,000.
- New: ₹15,00,000 − ₹75,000 = ₹14,25,000. Slab tax ₹93,750 + cess ₹3,750. Tax: ₹97,500.
- Old: ₹15,00,000 − ₹50,000 − ₹3,55,000 = ₹10,95,000. Slab tax ₹1,41,000 + cess ₹5,640. Tax: ₹1,46,640.
Even with ₹3.55 lakh of deductions, the new regime saves ₹49,140.
₹25 lakh with every deduction maxed
Basic is ₹10,00,000, HRA ₹5,00,000, and rent ₹4,80,000 a year in Mumbai, giving an HRA exemption of ₹3,80,000. Add 80C ₹1,50,000, 80D ₹25,000 for self and ₹50,000 for senior-citizen parents, NPS 80CCD(1B) ₹50,000 and home-loan interest ₹2,00,000. Total deductions: ₹8,55,000.
- New: taxable ₹24,25,000. Slab tax ₹3,07,500 + cess ₹12,300. Tax: ₹3,19,800.
- Old: taxable ₹15,95,000. Slab tax ₹2,91,000 + cess ₹11,640. Tax: ₹3,02,640.
Here the old regime wins, but only by ₹17,160. Drop the home loan and it loses.
| Salary | Deductions | New regime | Old regime | Cheaper |
|---|---|---|---|---|
| ₹8,00,000 | None | ₹0 | ₹65,000 | New |
| ₹12,75,000 | None | ₹0 | ₹1,87,200 | New |
| ₹15,00,000 | ₹3,55,000 | ₹97,500 | ₹1,46,640 | New |
| ₹25,00,000 | ₹8,55,000 | ₹3,19,800 | ₹3,02,640 | Old |
The break-even point: when the old regime is worth it
The break-even is the total of old-regime deductions (beyond the standard deduction) at which both regimes cost the same. Below it, the new regime is cheaper. Above it, the old one is.
| Gross salary | New regime tax | Break-even deductions |
|---|---|---|
| ₹8,00,000 | ₹0 | ₹2,50,000 |
| ₹10,00,000 | ₹0 | ₹4,50,000 |
| ₹12,75,000 | ₹0 | ₹7,25,000 |
| ₹15,00,000 | ₹97,500 | ₹5,43,750 |
| ₹20,00,000 | ₹1,92,400 | about ₹7,08,000 |
| ₹25,00,000 and above | ₹3,19,800+ | ₹8,00,000 |
Two patterns stand out. Around ₹12–13 lakh, the rebate makes the new regime very hard to beat. And from about ₹25 lakh up, the break-even settles at ₹8 lakh of deductions.
Most people can't reach ₹8 lakh without both a large HRA exemption and a home loan. 80C, 80D for yourself and the extra NPS deduction add up to only ₹2,25,000 for someone below 60.
Tip: Our tax calculator shows your own break-even, and how far your deductions are from it, as you type. If you're short by a lakh or more, extra 80C investing won't change the answer.
How to choose, and switch, each year
- Add up your real deductions. Use proofs you'll actually have: rent receipts, 80C statements, the health-insurance premium, the home-loan interest certificate.
- Compare both regimes with the same salary and deductions. Look at the yearly tax, not just the slab rates.
- Tell your employer at the start of the year, so TDS is deducted under your chosen regime. If you say nothing, the new regime applies by default.
- Confirm the choice in your return. Say your income is only salary, pension, interest or rent, with no business or professional income. Then you can choose afresh every year when you file. File by the due date so you keep that choice open.
If you have business or professional income, the rules on switching are much stricter. Talk to a CA before you move between regimes.
Your regime also changes your take-home pay, because it sets your monthly TDS. Once you know your tax, put the monthly figure into the salary in-hand calculator to see what reaches your bank account.
Note: Rules can change. Confirm with Form 16, your employer or a CA before filing.