Old vs new tax regime: which is better for you in FY 2026-27?
For most salaried people in FY 2026-27, the new regime means less tax. The old regime wins only when you claim large deductions together, such as 80C, health insurance, NPS, HRA and home-loan interest, at a moderate income. The only way to be sure is to work out both with your own figures.
What are the new regime tax slabs for FY 2026-27?
Budget 2026 made no changes, so FY 2026-27 uses the same slabs as FY 2025-26. Salaried people also get a ₹75,000 standard deduction, and a section 87A rebate makes tax nil on taxable income up to ₹12 lakh.
| Taxable income | Rate |
|---|---|
| Up to ₹4 lakh | Nil |
| ₹4 lakh to ₹8 lakh | 5% |
| ₹8 lakh to ₹12 lakh | 10% |
| ₹12 lakh to ₹16 lakh | 15% |
| ₹16 lakh to ₹20 lakh | 20% |
| ₹20 lakh to ₹24 lakh | 25% |
| Above ₹24 lakh | 30% |
A 4% health and education cess is added to the tax, plus a surcharge on very high incomes.
What are the old regime tax slabs?
For individuals under 60, the old regime has fewer, steeper slabs but lets you claim many more deductions. The standard deduction is ₹50,000, and the 87A rebate covers taxable income up to ₹5 lakh.
| Taxable income | Rate |
|---|---|
| Up to ₹2.5 lakh | Nil |
| ₹2.5 lakh to ₹5 lakh | 5% |
| ₹5 lakh to ₹10 lakh | 20% |
| Above ₹10 lakh | 30% |
Senior citizens (60+) and super seniors (80+) have higher nil-tax limits in the old regime.
Which deductions can you claim in each regime?
- Old regime: section 80C up to ₹1.5 lakh (EPF, PPF, ELSS, life insurance, tuition fees), 80D for health insurance, an extra ₹50,000 of NPS under 80CCD(1B), the HRA exemption, and home-loan interest on a self-occupied house up to ₹2 lakh.
- New regime: the ₹75,000 standard deduction and your employer's NPS contribution under 80CCD(2). Most other deductions aren't allowed.
Worked examples: which regime wins?
These figures come from the same tax engine as our AI Tax Assistant, for FY 2026-27, including cess.
| Salary and deductions | Old regime | New regime | Better |
|---|---|---|---|
| ₹12 lakh, no deductions | ₹1,63,800 | ₹0 | New, saves ₹1,63,800 |
| ₹15 lakh, 80C ₹1.5L + 80D ₹25k | ₹2,02,020 | ₹97,500 | New, saves ₹1,04,520 |
| ₹15 lakh, 80C + 80D + NPS ₹50k + HRA ₹2.4L | ₹1,13,360 | ₹97,500 | New, saves ₹15,860 |
| ₹15 lakh, all of the above + home-loan interest ₹2L | ₹71,760 | ₹97,500 | Old, saves ₹25,740 |
| ₹20 lakh, all of the above + home-loan interest ₹2L | ₹2,05,140 | ₹1,92,400 | New, saves ₹12,740 |
The pattern: the old regime only comes out ahead when heavy deductions meet a moderate salary. Raise the salary and the new regime's lower rates win again.
How do I check which regime is better for me?
- Get your Form 16 from your employer. Most employers issue it by mid-June.
- Upload it to the AI Tax Assistant, or enter the figures from Part B yourself.
- We calculate your tax under both regimes and show which saves more, plus any deductions you're not using.
- Choose that regime when you file your return. You can switch each year.