Old vs new tax regime 2026-27 — which saves more at your salary
Old vs new tax regime 2026-27: exact tax at ₹8L, ₹10L, ₹12L, ₹15L, ₹20L salaries. New regime wins in most cases. Old regime only makes sense above ₹15L with home loan. Real numbers.
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Old vs new tax regime 2026-27 — which one saves more at your salary
Every year this question gets asked roughly 40 million times in India. "Old or new tax regime?" And every year the answer is: it depends. Which is true and also useless.
So here are the actual numbers by salary, for Tax Year 2026-27 (income April 2026 to March 2027). No theory, just the math.
The slabs
New regime (Budget 2025 slabs):
| Income | Rate |
|---|---|
| Up to ₹4L | 0% |
| ₹4L – ₹8L | 5% |
| ₹8L – ₹12L | 10% |
| ₹12L – ₹16L | 15% |
| ₹16L – ₹20L | 20% |
| ₹20L – ₹24L | 25% |
| Above ₹24L | 30% |
Standard deduction: ₹75,000. Section 87A rebate: full tax waived for taxable income up to ₹12L (maximum rebate ₹60,000). This makes effective tax zero for gross salaries up to ₹12.75L.
Old regime:
| Income | Rate |
|---|---|
| Up to ₹2.5L | 0% |
| ₹2.5L – ₹5L | 5% |
| ₹5L – ₹10L | 20% |
| Above ₹10L | 30% |
Standard deduction: ₹75,000. Deductions available: 80C (up to ₹1.5L), 80D health insurance (₹25–50K), NPS 80CCD(1B) (₹50K), HRA, home loan interest Section 24 (up to ₹2L). 87A rebate: up to ₹12,500 for taxable income up to ₹5L.
The numbers
Two old regime columns: one with just standard deduction plus 80C and 80D (what most people actually claim), and one stacking every major deduction available (SD + 80C + 80D ₹50K + NPS ₹50K + HRA ₹2.5L = ₹5.75L total, no home loan).
| Gross salary | New regime | Old regime (SD+80C+80D only) | Old regime (SD+80C+80D+NPS+HRA) |
|---|---|---|---|
| ₹8L | ₹0 | ₹23,400 | ₹0 |
| ₹10L | ₹0 | ₹65,000 | ₹0 |
| ₹12L | ₹0 | ₹1,06,600 | ₹39,000 |
| ₹15L | ₹97,500 | ₹1,95,000 | ₹1,01,400 |
| ₹20L | ₹1,92,400 | ₹3,51,000 | ₹2,49,600 |
4% cess included. Assumes salaried income, no surcharge (income below ₹50L).
What this table shows
At ₹8L and ₹10L: new regime gives zero tax. Old regime gives zero only if you're renting in a metro with good HRA plus claiming NPS. If you're just doing 80C and health insurance, old regime costs you ₹23,400–65,000 more.
At ₹12L: new regime is zero. Old regime with maximum deductions is still ₹39,000. New regime wins clearly.
At ₹15L: here's where it gets close. New regime: ₹97,500. Old regime with max deductions including HRA: ₹1,01,400. New regime still wins. Old regime only wins at ₹15L if you add a home loan.
At ₹20L: new regime ₹1,92,400 vs old regime with max deductions ₹2,49,600. New regime wins. Add a home loan with ₹2L Section 24 deduction to the old regime, and it comes down to ₹1,87,200 — which beats new regime by ₹5,000. Barely worth the effort.
The one scenario where old regime actually wins: home loan
Under old regime, home loan interest is deductible under Section 24(b) — up to ₹2L per year. New regime doesn't allow this deduction.
On a ₹50L loan at 8.5%, interest in year 1 is about ₹4.2L. You can only claim ₹2L, but that's still a meaningful deduction at higher salaries.
At ₹20L+ with a home loan above ₹30–35L, the old regime can save ₹5,000–30,000 depending on your full deduction stack. Below ₹20L, new regime is still likely better even with a home loan.
This is the main reason old regime still exists. The government hasn't killed it because homeowners with large loans would pay significantly more.
The practical test
Add up what you're actually claiming, not what you theoretically could:
- PF contribution (your payslip shows this — it's already in 80C)
- Health insurance premium (80D)
- Actual HRA exemption — only counts if you rent and your employer pays HRA
- NPS contribution if you put money in
- Home loan interest (Section 24) if you have one
If your total deductions are below ₹3L: new regime wins, no calculation needed.
If they're above ₹4L and you have HRA or NPS: run the calculator.
If you have a home loan: check old regime almost regardless of other deductions.
The tax regime calculator will give you the exact comparison in about two minutes.
The default
From Tax Year 2026-27, new regime is the default under the Income Tax Act 2025. If you don't tell your employer otherwise via Form 12BB, your TDS is deducted under new regime slabs.
To opt into old regime: submit Form 12BB to HR at the start of the financial year. For the current year (Tax Year 2026-27), talk to HR now if you haven't already — April payroll may already be processed.
The honest bottom line
If you earn below ₹15L and don't have a home loan: new regime. Zero admin, zero deduction tracking, zero tax up to ₹12.75L.
If you earn above ₹15L with a home loan or very high HRA: run the old regime numbers. The savings might justify the paperwork.
For everyone else: the new regime is almost always better than people expect, because the 2025 budget changed the slabs significantly. The old comparison advice (new regime only for incomes above ₹7L with few deductions) no longer applies.
Tax figures for Tax Year 2026-27. Assumes salaried income only, no surcharge (income below ₹50L). HRA varies by city, basic salary, and rent amount. Consult a CA for your situation.