Old vs New Tax Regime FY 2026-27: Which One Saves You More?

The Finance Act 2025 locked in the new tax regime as the default for FY 2026-27. For most salaried taxpayers with incomes up to ₹12 lakh, the new regime now results in zero tax thanks to the ₹60,000 rebate under Section 87A. Above ₹12L, the math gets interesting.

The slabs, side by side

Under the new regime, income up to ₹4L is tax-free, then 5% to ₹8L, 10% to ₹12L, 15% to ₹16L, 20% to ₹20L, 25% to ₹24L, and 30% above. Standard deduction is ₹75,000 for salaried. Under the old regime, income up to ₹2.5L is tax-free, then 5% to ₹5L, 20% to ₹10L, 30% above. Standard deduction is ₹50,000.

The break-even deduction

For a ₹15L income, the new regime charges around ₹97,500 tax. To match that under the old regime, you would need roughly ₹3.75 lakh of deductions (HRA + 80C + 80D + home loan interest + NPS). If your deductions exceed ₹3.75L, old regime wins. Below that, new regime wins.

At ₹25L income, the break-even shifts to about ₹4.25 lakh in deductions. At ₹50L (where surcharge kicks in), it rises further.

When old regime still makes sense

If you claim all of: full HRA exemption (common in Mumbai/Bangalore renters), ₹1.5L in 80C (PPF/ELSS), ₹25K in 80D (health insurance), ₹2L in home loan interest, and ₹50K in NPS 80CCD(1B) — that's ₹4.5L+ in deductions. Old regime saves you ₹15,000-40,000 depending on income.

When new regime always wins

For 0-30 lakh earners with rented accommodation but no major investments: the new regime's lower rates beat any reasonable deduction set. Same for freelancers and consultants filing under 44ADA who already get a 50% deemed expenses benefit.

How to decide

Use our Old vs New Regime calculator — enter your salary, actual HRA exemption, and declared 80C/80D. It computes both regimes in one click and tells you the better option and exact savings.