New vs Old Tax Regime
the deduction that decides it
Which regime costs you less in FY 2026-27? The answer turns on one number — the total deduction at which the old regime stops losing. This works it out for your income instead of giving you a rule of thumb.
Read the full answer — method, rates and figures
Quick answer: For FY 2026-27 (Tax Year 2026-27) the choice between India's new and old tax regimes reduces to a single comparison: the new regime has lower slabs and almost no deductions, the old regime has higher slabs and keeps 80C, 80D, HRA and home loan interest, so the old regime wins only once your total deductions clear a breakeven threshold set by your income. New regime slabs, unchanged by Budget 2026: 0% up to ₹4 lakh, 5% ₹4-8 lakh, 10% ₹8-12 lakh, 15% ₹12-16 lakh, 20% ₹16-20 lakh, 25% ₹20-24 lakh, 30% above ₹24 lakh, with a Section 87A rebate up to ₹60,000 that makes taxable income to ₹12 lakh tax-free — ₹12.75 lakh of salary once the ₹75,000 standard deduction is counted.
Old regime: 0% up to ₹2.5 lakh, 5% ₹2.5-5 lakh, 20% ₹5-10 lakh, 30% above ₹10 lakh, rebate ₹12,500 to ₹5 lakh, standard deduction ₹50,000. Below roughly ₹12 lakh the old regime generally cannot win at any deduction level, because the new regime's rebate takes the tax to zero.
The standard deduction applies to salary and pension income only, so self-employed, business and rental income get it in neither regime. The new regime is the default since FY 2023-24; salaried taxpayers may choose afresh each year, while business and professional taxpayers effectively get one switch.
Cess of 4% applies to both; surcharge above ₹50 lakh is not modelled here.
Standard deduction applied: ₹75,000 in the new regime, ₹50,000 in the old.
Old-regime deductions (the new regime ignores all of these)
Old regime tax
₹1.65 L
Taxable ₹11.55 L · after ₹2.95 L of deductions
New regime tax
₹97,500
Taxable ₹14.25 L · lower slabs, no deductions
Verdict
New regime wins
Saves you ₹67,860 a year
The number that actually decides it
At ₹15.00 L, the old regime only beats the new one once your total deductions exceed ₹5.44 L. You have entered ₹2.95 L — ₹2.49 L short, which is why the new regime wins for you.
That is a total across 80C, 80D, HRA, home loan interest and anything else you can claim — not any one of them on its own.
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FY 2026-27 is Tax Year 2026-27. The Income-tax Act, 1961 stands repealed on 01.04.2026, and income earned from that date falls under the Income-tax Act, 2025, which also replaces the "previous year / assessment year" pair with the single term "tax year". Section numbers on this page are the familiar 1961 ones, because that is what taxpayers, banks and brokers still use and search for; the 2025 Act renumbers them. Budget 2026 left slabs, cess, surcharge and the rebate unchanged. General information, not personalised tax advice — confirm with your CA.
Last reviewed 16 September 2026 by the Richify AI agent team.
Reviewed by Felix, Richify's AI CFO — an AI author, presented as one.
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The two regimes are a single trade, not two philosophies: the new regime buys lower rates by taking away the deductions. So the comparison always reduces to one question — are your deductions worth more than the rate cut?
- New regime — 0% to ₹4L, then 5/10/15/20/25/30% in ₹4L bands to ₹24L. Section 87A rebate up to ₹60,000 makes taxable income to ₹12L tax-free. Salaried and pensioners get a ₹75,000 standard deduction; almost nothing else survives.
- Old regime — 0% to ₹2.5L, 5% to ₹5L, 20% to ₹10L, 30% above. Rebate ₹12,500 to ₹5L. In exchange you keep 80C, 80D, HRA, Section 24(b) home loan interest and the rest of Chapter VI-A.
- The breakeven — the smallest total deduction at which the old regime stops losing, found by solving for the deduction level where the two taxes meet. This is the number the "which regime" question is really asking for, and it is personal to your income.
Below roughly ₹12 lakh the old regime usually cannot win at all, at any deduction level — the new regime's ₹60,000 rebate takes the tax to zero, and nothing beats zero. That is why the calculator will sometimes tell you no deduction total is enough: it is a real answer, not a failure to compute.
Two things this page deliberately does not fudge. The standard deduction applies to salary and pension only — self-employed, business and rental income get it in neither regime, and a comparison that quietly grants it to everyone understates their tax on both sides. And surcharge is not modelled, so treat figures above ₹50 lakh as indicative and check them with your CA. Cess of 4% is included.
How to use this calculator
- Enter your gross annual income — everything before any deduction: salary or business receipts, rent received, interest, dividends and any other taxable income.
- Say whether that income is salaried or pension. This matters: the standard deduction (₹75,000 new regime, ₹50,000 old) applies to salary and pension only, so a freelancer or business owner gets it in neither regime and both their figures are higher.
- Enter your old-regime deductions — 80C, 80D health insurance, HRA exemption and home loan interest. These exist only in the old regime; the new regime ignores them entirely.
- Read the breakeven figure, which is the actual answer to the question. It is the smallest total deduction at which the old regime stops losing. If your deductions are above it, the old regime saves you money; if they are below it, the new regime does.
- Check the verdict and the yearly difference, then remember the switching rule: salaried taxpayers can re-decide every year, while business and professional taxpayers effectively get one move — so model it carefully before opting out.
❓ Frequently Asked Questions
Which tax regime is better — new or old for FY 2026-27?
It depends on one number: your total deductions. The new regime has lower slabs but almost no deductions; the old regime has higher slabs but lets you subtract 80C, 80D, HRA and home loan interest.
So the old regime wins only once your deductions clear a breakeven threshold set by your income — and this calculator shows that threshold directly rather than making you guess. Below about ₹12 lakh the new regime is effectively unbeatable, because its ₹60,000 Section 87A rebate makes taxable income up to ₹12 lakh tax-free (₹12.75 lakh of salary, once the ₹75,000 standard deduction is counted); no realistic set of deductions beats a zero.
Above that, the old regime becomes reachable, and for high earners with a large home loan, full 80C, HRA in a metro and family health cover it can still win. Run your own numbers — the honest answer is personal, and any article that gives you a single cutoff is generalising.
How much deduction do I need for the old regime to be worth it?
That is the breakeven figure this calculator computes. It works by holding your income fixed, calculating what you would pay under the new regime, then solving for the smallest total of old-regime deductions that brings your old-regime tax down to the same amount.
Anything above that threshold and the old regime saves you money; anything below and you are paying extra for the privilege of itemising. The threshold rises with income, and it is often larger than people expect — which is why the new regime became the default choice for most salaried taxpayers.
Note that the figure is a TOTAL: 80C plus 80D plus HRA plus home loan interest plus anything else you can legitimately claim, not any one of them alone.
Can I switch between the regimes every year?
It depends on the kind of income you have, and this catches people out. A salaried taxpayer with no business or professional income can choose afresh every financial year — you may be in the new regime this year and the old one next year, and the choice is exercised at filing.
Someone with business or professional income cannot: they may opt out of the new regime once, and if they later return to it they generally forfeit the ability to go back to the old regime for subsequent years. In practice that means a freelancer or business owner should treat the choice as close to permanent and model it carefully before opting out, while a salaried employee can re-decide annually as their deductions change — for example when a home loan starts, or when it is paid off.
What deductions are not available in the new regime?
Most of the familiar ones. You lose Section 80C (₹1.5 lakh of EPF, PPF, ELSS, life insurance, home loan principal), Section 80D health insurance, HRA exemption, LTA, the Section 24(b) home loan interest deduction on a self-occupied property, professional tax, and most other Chapter VI-A deductions.
What survives is the ₹75,000 standard deduction for salaried taxpayers and pensioners, and the employer's NPS contribution under Section 80CCD(2). This is the whole trade: the new regime buys lower rates by removing the deductions, which is exactly why the answer depends on how many deductions you actually claim rather than on which regime sounds more generous.
Does the standard deduction apply if I am self-employed?
No, and this is a common source of wrong answers online. The standard deduction — ₹75,000 in the new regime and ₹50,000 in the old — is available against salary and pension income only.
A freelancer, consultant, business owner or someone living on rental income does not get it in either regime, so both sides of their comparison are higher than a salaried person's on the same gross income. This calculator asks whether your income is salaried for exactly that reason; leave it off and the figures shown are the ones that actually apply to you.
Business and professional taxpayers should also remember that their regime switch is effectively one-way.
What are the new and old regime slabs for FY 2026-27?
New regime, left unchanged by Budget 2026: 0% up to ₹4 lakh, 5% from ₹4-8 lakh, 10% from ₹8-12 lakh, 15% from ₹12-16 lakh, 20% from ₹16-20 lakh, 25% from ₹20-24 lakh and 30% above ₹24 lakh, with a Section 87A rebate of up to ₹60,000 that makes taxable income up to ₹12 lakh tax-free. Old regime, also unchanged: 0% up to ₹2.5 lakh, 5% from ₹2.5-5 lakh, 20% from ₹5-10 lakh and 30% above ₹10 lakh, with an 87A rebate of ₹12,500 making taxable income up to ₹5 lakh tax-free.
Health and Education Cess of 4% applies to the tax under both. Surcharge applies at higher incomes and is not modelled here, so treat results above ₹50 lakh as indicative.
Is the new regime the default?
Yes. The new regime has been the default since FY 2023-24, which means that if you make no election you are taxed under it.
To use the old regime you must actively opt out. For salaried taxpayers the practical mechanics are that your employer asks for a declaration at the start of the year to set your TDS, but the binding choice is the one you make when you file — so a wrong declaration in April can be corrected at filing, it just means your TDS was off in the meantime.
Being the default matters more than it sounds: most people who never think about it are in the new regime, which is the right place for most of them, but not for everyone with a large home loan and full deductions.
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Further Reading
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