For most salaried people earning up to about ₹15 lakh, the new tax regime now gives lower tax. The old regime wins only if your deductions – HRA, home loan interest, 80C (now Section 123), 80D and NPS – add up to roughly ₹5.5 lakh or more a year. Use the examples below, then check your own numbers in the income tax calculator.
The two regimes at a glance (tax year 2026-27)
| New regime (default) | Old regime | |
|---|---|---|
| Standard deduction (salaried) | ₹75,000 | ₹50,000 |
| Tax-free income (with rebate) | Up to ₹12 lakh total income | Up to ₹5 lakh total income |
| HRA, LTA exemption | Not allowed | Allowed |
| 80C, 80D, home loan interest (self-occupied) | Not allowed | Allowed |
| Employer’s NPS contribution | Allowed | Allowed |
| Slab rates | 0% to 30% in 7 steps | 0%, 5%, 20%, 30% |
New regime slabs
| 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% |
A rebate makes the tax nil if total income is up to ₹12 lakh. For a salaried person, that means a salary of up to ₹12.75 lakh after the ₹75,000 standard deduction. Just above the limit, marginal relief ensures the tax never exceeds the income above ₹12 lakh. A 4% health and education cess is added in both regimes.
Worked examples
| Salary | Deductions claimed (old regime) | Tax: old regime | Tax: new regime | Better |
|---|---|---|---|---|
| ₹10 lakh | ₹1.75 lakh (80C + 80D) | ₹70,200 | Nil | New |
| ₹15 lakh | ₹1.75 lakh (80C + 80D) | ₹2,02,800 | ₹97,500 | New |
| ₹15 lakh | ₹6.75 lakh (80C, 80D, HRA, home loan interest, NPS) | ₹70,200 | ₹97,500 | Old |
| ₹25 lakh | ₹6.75 lakh | ₹3,58,800 | ₹3,19,800 | New |
All figures include 4% cess and use the standard deduction for each regime.
The break-even rule of thumb
Add up every deduction and exemption you would really claim under the old regime. The old regime starts to win only above roughly:
- ₹7 lakh of deductions at a ₹10 lakh salary (rarely possible)
- ₹5.5 lakh at ₹15 lakh
- ₹7.25 lakh at ₹20 lakh
- ₹8 lakh at ₹25 lakh
That usually means you pay high rent in a metro (large HRA exemption) and have a home loan, plus full 80C and 80D.
How to choose: a quick checklist
- List your actual HRA exemption (use the HRA calculator), home loan interest, 80C, 80D and NPS.
- Enter them in the income tax calculator – it shows both regimes side by side.
- Do not buy insurance or lock money into products only to save tax. The new regime may already be cheaper.
- Tell your employer your choice at the start of the year so TDS is right. You can still change it when you file your return (salaried people can switch every year).
Good to know
- From 1 April 2026 the Income-tax Act, 2025 replaces the 1961 Act and many section numbers change. It uses “tax year” in place of “previous year” and “assessment year”. Section 80C is now Section 123, and the new regime sits in Section 202. Familiar names like “80C” are still used here because that is how most people search, and your 2025-26 return still uses the old numbers.
- If you have business or professional income, switching back and forth between regimes is restricted.
- Slabs can change in each Union Budget. We update this guide and the calculator after every Budget – see our update log.