Short answer: for most salaried people in tax year 2026-27, the new regime costs less. The old regime only wins if your deductions are large — on a ₹15 lakh salary you would need about ₹5.45 lakh of deductions before it comes out ahead. Below are the worked numbers, and a free tool to check your own.
What changed this year
From 1 April 2026 the Income-tax Act, 2025 replaced the 1961 Act. The biggest visible change is vocabulary: “financial year” and “assessment year” are replaced by a single tax year, and many sections were renumbered. The slab rates themselves did not change, and the new regime remains the default.
The two sets of slabs
New regime (default): 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%. Standard deduction for salaried: ₹75,000. A rebate makes tax nil if taxable income is up to ₹12 lakh.
Old regime (below 60): up to ₹2.5 lakh nil; ₹2.5–5 lakh 5%; ₹5–10 lakh 20%; above ₹10 lakh 30%. Standard deduction: ₹50,000. Rebate up to ₹12,500 if taxable income is up to ₹5 lakh. In exchange for higher rates, you can claim deductions such as the old 80C (EPF, PPF, ELSS, insurance, up to ₹1.5 lakh), health insurance, extra NPS, HRA and home-loan interest.
Both regimes add 4% health and education cess.
Worked examples (total tax including cess)
| Gross salary | New regime | Old regime, ₹2.25 lakh deductions* | Old regime, ₹4 lakh deductions | Deductions needed for old regime to win |
|---|---|---|---|---|
| ₹8 lakh | ₹0 | ₹18,200 | ₹0 | ₹2.5 lakh |
| ₹12 lakh | ₹0 | ₹1,01,400 | ₹65,000 | Never, in practice |
| ₹12.75 lakh | ₹0 | ₹1,17,000 | ₹80,600 | Never, in practice |
| ₹13 lakh | ₹26,000 | ₹1,24,800 | ₹85,800 | ₹6.9 lakh |
| ₹15 lakh | ₹97,500 | ₹1,87,200 | ₹1,32,600 | ₹5.45 lakh |
| ₹18 lakh | ₹1,50,800 | ₹2,80,800 | ₹2,26,200 | ₹6.45 lakh |
| ₹20 lakh | ₹1,92,400 | ₹3,43,200 | ₹2,88,600 | ₹7.1 lakh |
| ₹25 lakh | ₹3,19,800 | ₹4,99,200 | ₹4,44,600 | ₹8 lakh |
*₹2.25 lakh = ₹1.5 lakh 80C-type investments + ₹25,000 health insurance + ₹50,000 extra NPS. Resident individuals below 60, salary income only, no surcharge. At ₹12 and ₹12.75 lakh the new regime is nil, so the old regime can at best tie.
The one number that decides it: your break-even
Instead of asking “which regime is better?”, ask: “how much would I need to claim for the old regime to win — and do I actually have that much?” For most salaries between ₹13 and ₹25 lakh, the answer is roughly ₹5.5–8 lakh of deductions and exemptions. Most people’s 80C, health insurance and NPS add up to ₹2–2.5 lakh. The people who clear the bar usually combine a large HRA exemption (high rent in a metro) with home-loan interest on a self-occupied house.
Just above ₹12 lakh? Don’t panic about the cliff
If your taxable income is slightly over ₹12 lakh, you lose the full rebate — but marginal relief caps your tax at the amount by which you exceed ₹12 lakh. On a ₹13 lakh salary (₹12.25 lakh taxable), slab tax would be ₹63,750, but marginal relief caps it at ₹25,000, so you pay ₹26,000 with cess. Some calculators miss this and overstate the tax by tens of thousands.
How to decide in two minutes
- Add up what you can genuinely claim: 80C-type investments, health insurance, extra NPS, your HRA exemption, and home-loan interest.
- Compare it with the break-even for your salary (table above, or exact in the free checker).
- If you are well below the break-even, the new regime is almost certainly cheaper. If you are close, run the exact numbers.
Get the free Old vs New Tax Regime Checker — a spreadsheet for Excel or Google Sheets that does both regimes side by side, applies the rebate, marginal relief, cess and deduction caps, and shows your personal break-even. No login, and your numbers stay on your device.
Want to know what your salary means each month? See CTC vs in-hand salary.
Frequently asked questions
Which tax regime is better for tax year 2026-27?
For most salaried people, the new regime. The old regime only wins with large deductions: about ₹5.45 lakh on a ₹15 lakh salary, and ₹5.5–8 lakh for most salaries between ₹13 and ₹25 lakh.
Is the new regime the default?
Yes. If you don’t tell your employer otherwise, TDS is deducted under the new regime.
Does the ₹12 lakh rebate mean a ₹12 lakh salary is tax-free?
Better: with the ₹75,000 standard deduction, a salary of up to ₹12.75 lakh generally pays no tax under the new regime.
Did slab rates change for tax year 2026-27?
No. The new Act changed terminology and section numbers; the rates carried over.
Can I claim 80C in the new regime?
Mostly no. Employer contributions to NPS are one of the few deductions allowed in both.
This article explains general rules with illustrative examples; it is not tax advice. It does not cover surcharge (income above ₹50 lakh), capital gains, business income or taxpayers aged 60+. Confirm your own situation with a qualified chartered accountant.