Every April your employer asks which tax regime you want. Pick the wrong one and you can lose tens of thousands of rupees a year. The good news: for FY 2026-27 the answer is simple for most people.
The short answer
If your salary is up to ₹12.75 lakh, the new regime means zero income tax. Above that, the new regime is still cheaper for most people unless they claim large deductions such as HRA and home loan interest together.
Income Tax CalculatorNew vs old regime for FY 2026-27, with HRA, 80C, 80D and home loan.Open →New regime slabs for FY 2026-27
| 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% |
Salaried people get a ₹75,000 standard deduction, and a rebate makes the tax zero when taxable income is ₹12 lakh or less. That's why a ₹12.75 lakh salary pays nothing. Add 4% health and education cess to the tax.
Tax at different salaries
We worked these out with our calculator. For the old regime we assumed you use the full ₹1.5 lakh under 80C and ₹25,000 of health insurance under 80D, which is more than many people actually claim.
| Salary | New regime | Old regime (80C + 80D used) |
|---|---|---|
| ₹8 lakh | ₹0 | ₹28,600 |
| ₹12 lakh | ₹0 | ₹1,11,800 |
| ₹15 lakh | ₹97,500 | ₹2,02,800 |
| ₹20 lakh | ₹1,92,400 | ₹3,58,800 |
| ₹30 lakh | ₹4,75,800 | ₹6,70,800 |
Even with ₹1.75 lakh of deductions, the old regime costs more at every level here.
When the old regime can still win
The old regime only makes sense when your deductions are large. Typical cases:
- You pay high rent in a metro and get a big HRA exemption.
- You pay home loan interest on a house you live in (up to ₹2 lakh is deductible in the old regime).
- You use 80C, 80D, NPS (80CCD(1B)) and HRA all together.
Our income tax calculator shows the exact amount of extra deductions you would need for the old regime to match the new one, so you don't have to guess.
How to decide in two minutes
- Open the income tax calculator.
- Enter your salary, rent, and the deductions you actually claim.
- It shows both regimes side by side and tells you which saves more and by how much.
Tip: salaried people can usually switch regimes every year when filing the return, so check again each April.
This is general information, not tax advice. For complex cases, speak to a chartered accountant.
