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.
Disclaimer
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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.
For the full tax planning framework — deductions toolkit, regime selection workflow, April checklist — see the income tax planning guide for 2026-27. This page focuses on the comparison itself.
The slabs
New regime (Budget 2025 slabs, codified in Income Tax Act 2025):
| 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 (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).
Worked examples
₹10 lakh — new regime wins, no contest
Gross salary: ₹10,00,000 Standard deduction: ₹75,000 Taxable income: ₹9,25,000
Tax on ₹9.25L (new regime):
- ₹4L at 0% = ₹0
- ₹4L–₹8L at 5% = ₹20,000
- ₹8L–₹9.25L at 10% = ₹12,500
- Subtotal: ₹32,500
- 87A rebate (taxable ≤ ₹12L): −₹32,500
- Tax = ₹0
Even if you claim full 80C (₹1.5L) + 80D (₹25K) under old regime, taxable income = ₹10L − ₹75K − ₹1.5L − ₹25K = ₹7.5L. Old regime tax at that taxable income:
- ₹2.5L at 0% = ₹0
- ₹2.5L–₹5L at 5% = ₹12,500
- ₹5L–₹7.5L at 20% = ₹50,000
- Subtotal: ₹62,500 + cess ₹2,500 = ₹65,000
New regime saves ₹65,000 at ₹10L salary, regardless of deductions.
₹15 lakh — depends on home loan
New regime tax at ₹15L: Taxable income = ₹15L − ₹75K = ₹14.25L
- ₹4L at 0% = ₹0
- ₹4L–₹8L at 5% = ₹20,000
- ₹8L–₹12L at 10% = ₹40,000
- ₹12L–₹14.25L at 15% = ₹33,750
- Subtotal: ₹93,750
- 4% cess: ₹3,750
- New regime tax: ₹97,500
Old regime with full deduction stack (no home loan): Assume HRA exemption of ₹2.25L (renting in Mumbai, basic ₹7.5L).
| Deduction | Amount |
|---|---|
| Standard deduction | ₹75,000 |
| 80C | ₹1,50,000 |
| 80D (family + parents) | ₹50,000 |
| HRA exemption (Mumbai) | ₹2,25,000 |
| NPS 80CCD(1B) | ₹50,000 |
| Total deductions | ₹5,50,000 |
Taxable income: ₹15L − ₹5.5L = ₹9.5L
Tax on ₹9.5L (old regime):
- ₹2.5L at 0% = ₹0
- ₹2.5L–₹5L at 5% = ₹12,500
- ₹5L–₹9.5L at 20% = ₹90,000
- Subtotal: ₹1,02,500 + cess ₹4,100 = ₹1,06,600
Old regime (without home loan) = ₹1,06,600. New regime = ₹97,500. New regime still wins at ₹15L even with HRA + full 80C + NPS stack.
Old regime with home loan at ₹15L: Add Section 24 home loan interest deduction of ₹2L to the above. Taxable income falls to ₹7.5L.
Tax on ₹7.5L: ₹0 + ₹12,500 + ₹50,000 = ₹62,500 + cess ₹2,500 = ₹65,000
Old regime with home loan = ₹65,000. New regime = ₹97,500. Old regime saves ₹32,500 at ₹15L, but only because of the home loan.
What this table shows
At ₹8L and ₹10L: New regime gives zero tax. Old regime only gives zero if you have substantial HRA + NPS on top of 80C. If you're doing just 80C and health insurance, old regime costs ₹23,400–65,000 more.
At ₹12L: New regime is zero. Old regime with maximum deductions (no home loan) is still ₹39,000. New regime wins clearly.
At ₹15L: New regime: ₹97,500. Old regime with max deductions including HRA but no home loan: over ₹1 lakh. 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 home loan interest at ₹2L, old regime comes down to about ₹1,87,200 — which beats new regime by roughly ₹5,000. The savings exist, but barely justify the paperwork.
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 significant deduction at higher salaries.
At ₹20L+ with a home loan above ₹30–35L, 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 removed it because homeowners with large outstanding loans would pay significantly more without it.
Common mistakes in this comparison
Using the wrong deduction totals. Many comparison articles assume everyone uses full 80C + full 80D + HRA + NPS. Most salaried employees actually use EPF (which partially fills 80C), a basic health insurance, and nothing else. At actual claimed deductions rather than theoretical maximums, new regime wins more often than the comparison looks on paper.
Forgetting that standard deduction exists in both regimes. Some older calculators and articles still quote ₹50,000 as the standard deduction. It's ₹75,000 from FY 2024-25 onwards, and it applies in both old and new regime. Don't let a stale calculator give you wrong numbers.
Claiming HRA for the full year when rent changed mid-year. If you moved houses or cities during Tax Year 2026-27, your HRA exemption is calculated month by month. Don't apply a uniform annual figure.
Assuming old regime is better just because you have investments. The 80C investments are yours regardless of which regime you're on. The question is only whether the deduction reduces tax enough to beat new regime. At most salary levels below ₹15L, it doesn't.
Not accounting for employer NPS under 80CCD(2). This is the one deduction available in the new regime beyond the standard deduction. If your employer contributes to NPS as part of your CTC (up to 10% of basic salary), that's deductible under 80CCD(2) whether you're on old or new regime. If you're optimising new regime and your employer offers this, it's worth taking.
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 numbers.
If you have a home loan with outstanding balance above ₹30L: check old regime almost regardless of other deductions.
The tax 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 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 may justify the paperwork.
For everyone else: the new regime beats expectations because the 2025 budget changed the slabs significantly. The old 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. Worked examples are illustrative — consult a CA for your situation.
Frequently asked questions
At what salary does new regime start losing to old regime?
In most cases, new regime wins below ₹15L gross salary. Above ₹15L, old regime can win only if you have a home loan with meaningful outstanding balance (above ₹25–30L) combined with full utilisation of 80C, 80D, HRA, and NPS. Without a home loan, new regime remains competitive even at ₹20L and above.
Can I switch between old and new regime every year?
Salaried employees can switch regimes annually. Tell your employer your preference via Form 12BB before the financial year starts. If you miss that window, your TDS defaults to new regime, but you can still choose the correct regime when filing your ITR. Switching doesn't carry a penalty.
Does HRA still count under the new regime?
No. HRA exemption under Section 10(13A) is available only under the old regime. If you choose new regime, HRA is treated as fully taxable income. For salaried employees paying high rent in a metro, HRA can be a large deduction — compare both regimes carefully if HRA + 80C together exceed ₹3L.
Is the ₹75,000 standard deduction available in both regimes?
Yes. The ₹75,000 standard deduction for salaried employees applies under both old and new regimes. Your employer already accounts for it in TDS — it doesn't need separate documentation.
My employer already deducted TDS under new regime. Can I still choose old regime at ITR filing?
Yes. TDS deducted during the year is just an advance payment. When you file your ITR, you declare your chosen regime and the actual deductions you're claiming. If old regime results in lower tax than what TDS was computed on, you get a refund. If it results in higher tax (which would happen if you accidentally chose old regime with fewer deductions than expected), you pay the difference with interest.
What if I join a new employer mid-year? Does the regime carry over?
No. A new employer defaults to new regime unless you submit Form 12BB. If you were on old regime with your previous employer, submit Form 12BB to the new one promptly. Also provide Form 12B to the new employer showing salary already received, so they can correctly compute TDS for the rest of the year.