Old vs New Tax Regime FY 2026-27: who saves more at each salary level

Tax year 2026-27 (1 April 2026 to 31 March 2027) is the first year under the Income-tax Act, 2025. The rates did not change from the year before: the Finance Bill 2026 memorandum proposed no change to the slabs. What changed is the section numbers. The old Section 80C is now Section 123, the 87A rebate is Section 156, and the new regime lives in Section 202. This guide compares the two regimes at twelve salary levels. Every number in the table was worked out by our old vs new tax regime calculator, using the same code you can run with your own figures.

The two regimes in one minute

New regime (the default). Slabs are nil up to ₹4 lakh, then 5% to ₹8 lakh, 10% to ₹12 lakh, 15% to ₹16 lakh, 20% to ₹20 lakh, 25% to ₹24 lakh and 30% above. Salaried people get a ₹75,000 standard deduction. A rebate of up to ₹60,000 wipes out the tax when taxable income is ₹12 lakh or less, so a salary of up to ₹12.75 lakh pays nothing. Just above ₹12 lakh, marginal relief stops the tax from being more than the income over ₹12 lakh. Very few deductions are allowed. The main ones are the employer’s NPS contribution (up to 14% of basic pay) and the standard deduction.

Old regime (you opt in). Slabs are nil up to ₹2.5 lakh, 5% to ₹5 lakh, 20% to ₹10 lakh and 30% above. Seniors aged 60 to 79 get a nil band to ₹3 lakh, and those 80 or older to ₹5 lakh. The standard deduction is ₹50,000, and the rebate (up to ₹12,500) only helps up to ₹5 lakh of taxable income. In return you keep the deductions: Section 123 investments up to ₹1.5 lakh, your own NPS up to ₹50,000, health insurance (₹25,000, or ₹50,000 for seniors, plus the same again for parents), home-loan interest on a self-occupied home up to ₹2 lakh, the HRA exemption, professional tax and more.

Both regimes add 4% health and education cess. Surcharge starts above ₹50 lakh, and the new regime caps it at 25%.

The table: tax at each salary level

Assumptions: a resident salaried employee under 60, with salary as the only income. Professional tax is left out so the columns compare like with like. “₹2.25 lakh deductions” means ₹1.5 lakh under Section 123, ₹50,000 of your own NPS and ₹25,000 of health insurance. “₹4.25 lakh deductions” adds ₹2 lakh of home-loan interest on the home you live in. “Breaks even at” is the total of old-regime deductions (beyond the standard deduction) at which the old regime stops costing more than the new one. Figures are total tax including cess, rounded to the nearest rupee.

Gross salary	New regime	Old: no deductions	Old: ₹2.25 lakh deductions	Old: ₹4.25 lakh deductions	Old regime breaks even at	Lower with ₹4.25 lakh
₹5 lakh	₹0	₹0	₹0	₹0	₹0	Equal
₹7.5 lakh	₹0	₹54,600	₹0	₹0	₹2,00,000	Equal
₹10 lakh	₹0	₹1,06,600	₹59,800	₹18,200	₹4,50,000	New by ₹18,200
₹12 lakh	₹0	₹1,63,800	₹1,01,400	₹59,800	₹6,50,000	New by ₹59,800
₹12.75 lakh	₹0	₹1,87,200	₹1,17,000	₹75,400	₹7,25,000	New by ₹75,400
₹15 lakh	₹97,500	₹2,57,400	₹1,87,200	₹1,24,800	₹5,43,750	New by ₹27,300
₹18 lakh	₹1,50,800	₹3,51,000	₹2,80,800	₹2,18,400	₹6,41,667	New by ₹67,600
₹20 lakh	₹1,92,400	₹4,13,400	₹3,43,200	₹2,80,800	₹7,08,334	New by ₹88,400
₹25 lakh	₹3,19,800	₹5,69,400	₹4,99,200	₹4,36,800	₹8,00,000	New by ₹1,17,000
₹30 lakh	₹4,75,800	₹7,25,400	₹6,55,200	₹5,92,800	₹8,00,000	New by ₹1,17,000
₹40 lakh	₹7,87,800	₹10,37,400	₹9,67,200	₹9,04,800	₹8,00,000	New by ₹1,17,000
₹50 lakh	₹10,99,800	₹13,49,400	₹12,79,200	₹12,16,800	₹8,00,000	New by ₹1,17,000

The table was produced by scripts/gen-regime-table.ts, which calls the calculator’s comparison function. A unit test recomputes it and checks that every row above matches, so the table cannot drift from the calculator.

What the table shows

Up to ₹12.75 lakh, the new regime is nil — and hard to beat. At ₹10 lakh the old regime needs ₹4.5 lakh of deductions just to get down to zero. At ₹12 lakh it needs ₹6.5 lakh, and at ₹12.75 lakh ₹7.25 lakh. Few people can claim that much, so in this range the new regime almost always wins.

From ₹15 lakh the gap narrows, then widens again. Once taxable income passes ₹12 lakh, the new-regime rebate falls away. At ₹15 lakh the break-even drops to about ₹5.44 lakh. That is still more than the ₹4.25 lakh of deductions in the right-hand columns, so the new regime saves ₹27,300 even with a full home-loan claim. From there the break-even climbs again: about ₹6.42 lakh at ₹18 lakh and ₹7.08 lakh at ₹20 lakh.

Above about ₹25 lakh the break-even is a flat ₹8 lakh. Both regimes then tax each extra rupee at 30%. The difference between them stays fixed, so you need ₹8 lakh of old-regime deductions (on top of the ₹50,000 standard deduction) to break even. Typical claims of ₹4.25 lakh leave the new regime ₹1,17,000 cheaper at every salary from ₹25 lakh to ₹50 lakh.

Who should still look at the old regime?

The old regime pays off when several large claims stack up. The usual big three are:

1. A large HRA exemption. If you rent in a city with high rents, the exempt part of your HRA can be ₹2 lakh to ₹4 lakh a year. Work out your figure with the HRA calculator.
2. Home-loan interest on the home you live in. This is worth up to ₹2 lakh, and only in the old regime. The home-loan tax benefit calculator shows the full effect, including principal under Section 123, joint loans and let-out homes.
3. Full Section 123, NPS and health insurance claims. Together these come to ₹2.25 lakh, or more if you also insure parents.

A worked example from the calculator: on a ₹25 lakh salary with ₹1.5 lakh of Section 123, ₹50,000 NPS, ₹25,000 health insurance, ₹2 lakh home-loan interest and ₹2,400 professional tax, an HRA exemption of ₹3.6 lakh brings old-regime deductions to ₹7.87 lakh. The new regime is still ₹3,931 cheaper. Raise the HRA exemption to ₹4 lakh (₹8.27 lakh of deductions) and the old regime saves ₹8,549. That is how close the line is.

How the numbers are worked out

For each regime the calculator takes gross salary and subtracts the deductions that regime allows, with each one capped at its legal limit. It then applies the slab rates band by band, subtracts the Section 156 rebate (with marginal relief in the new regime), adds surcharge above ₹50 lakh (with marginal relief) and adds 4% cess. The break-even is found by searching for the smallest total of old-regime deductions at which the old regime’s tax is no higher than the new regime’s.

Tax is shown before rounding to the nearest ₹10, so your return may differ by a few rupees. Capital gains and other special-rate income, non-residents, business income and agricultural income are outside the table. If your pay includes employer NPS, enter it in the calculator. It is deductible in both regimes (14% of basic in the new, 10% in the old), so it does not change the comparison much.

Switching between regimes

Salaried people with no business income can choose either regime each year when they file their return. The new regime applies unless you opt out. Tell your employer your choice at the start of the year so that TDS matches. If you choose differently when filing, the tax is settled in the return. People with business or professional income have stricter rules on switching back and forth.

Related tools

• Old vs new tax regime calculator: your own figures, with the slab-by-slab working for both regimes.
• Income tax calculator: a quick check of tax under both regimes.
• CTC to in-hand calculator and the salary hike and in-hand planner: what a CTC or a raise means for monthly pay.

Figures checked against the Income-tax Act 2025 and the Finance Bill 2026 memorandum. This is general information, not tax advice; check your own position with a qualified adviser before filing.