Old vs New Tax Regime 2026-27: Which Saves More?
Every salaried person in India has to make the same choice each year: the new tax regime, with lower rates but almost no deductions, or the old regime, with higher rates but deductions like 80C, HRA and home loan interest. For most people the new regime now wins — but not for everyone. This guide shows the numbers for the tax year 2026-27 so you can see where you stand.
Not tax advice. The figures below follow the rates announced for 2026-27 (Budget 2026 kept the slabs from 2025). Rules can change and your situation may have details not covered here — check with your employer, a CA or the Income Tax Department before you file.
The new regime slabs for 2026-27
| Taxable income | Rate |
|---|---|
| Up to ₹4 lakh | Nil |
| ₹4 – 8 lakh | 5% |
| ₹8 – 12 lakh | 10% |
| ₹12 – 16 lakh | 15% |
| ₹16 – 20 lakh | 20% |
| ₹20 – 24 lakh | 25% |
| Above ₹24 lakh | 30% |
- Standard deduction: ₹75,000 for salaried people and pensioners.
- Rebate: if your taxable income is ₹12 lakh or less, the rebate (up to ₹60,000) wipes out the tax completely. With the standard deduction, that means a salary up to ₹12.75 lakh pays no tax.
- Marginal relief: just above ₹12 lakh, your tax can't be more than the income above ₹12 lakh — so you never lose money by earning a little more.
- 4% health and education cess is added on top of the tax.
The old regime, in short
The old regime keeps the older slabs — nil up to ₹2.5 lakh (₹3 lakh at 60+, ₹5 lakh at 80+), then 5%, 20% and 30% above ₹10 lakh — with a ₹50,000 standard deduction and a rebate only up to ₹5 lakh of taxable income. Its advantage is the deductions:
- 80C — PF, PPF, ELSS, life insurance, tuition fees, home loan principal: up to ₹1.5 lakh.
- 80D — health insurance premiums for yourself and your parents.
- HRA exemption — if you pay rent. See our rent receipt and HRA guide.
- Home loan interest on a house you live in: up to ₹2 lakh.
- NPS — an extra ₹50,000 under 80CCD(1B).
Worked examples (salary, below 60)
All figures are total tax for the year including cess, worked out with our Income Tax Calculator.
| Salary & deductions | New regime | Old regime | Better |
|---|---|---|---|
| ₹10 lakh, no deductions | ₹0 | ₹1,06,600 | New |
| ₹12.75 lakh, no deductions | ₹0 | ₹1,87,200 | New |
| ₹15 lakh + 80C ₹1.5L + 80D ₹25k | ₹97,500 | ₹2,02,800 | New |
| ₹15 lakh + 80C, 80D, HRA ₹2.4L, home loan ₹2L | ₹97,500 | ₹82,680 | Old |
| ₹25 lakh + 80C, 80D ₹50k, HRA ₹3L, home loan ₹2L, NPS ₹50k | ₹3,19,800 | ₹3,35,400 | New |
The pattern is clear: the old regime only wins when your deductions are large — typically when you pay high rent and have a home loan, on top of a full 80C. Even then, at higher salaries the new regime's lower rates often catch up.
A quick rule of thumb
- If your salary is up to ₹12.75 lakh, pick the new regime — your tax is zero.
- Above that, add up every deduction you can actually claim (80C, 80D, HRA exemption, home loan interest, NPS). If the total is small — under about ₹4–5 lakh — the new regime almost always wins.
- If your deductions are bigger than that, run both in a calculator. The answer depends on your exact numbers.
Can you switch every year?
Salaried people without business income can choose each year — you tell your employer at the start of the year (so the right TDS is cut) and confirm the choice when you file your return. People with business or professional income have much stricter limits on switching back and forth, so check the rules before changing.
Enter your salary and deductions and see both regimes side by side — instantly, and nothing is stored.
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