The short answer
For most salaried people, the new regime costs less. The old regime wins only when your deductions are large: HRA, 80C, 80D, home loan interest and NPS added together.
How much in deductions do you need for the old regime to win?
With no deductions at all, the new regime is cheaper at every salary. The old regime only catches up once your deductions (on top of its ₹50,000 standard deduction) reach about:
| Yearly salary | New regime tax | Old regime tax, no deductions | Deductions to break even |
|---|---|---|---|
| ₹10 lakh | ₹0 | ₹1,06,600 | about ₹4.5 lakh |
| ₹15 lakh | ₹97,500 | ₹2,57,400 | about ₹5.44 lakh |
| ₹20 lakh | ₹1,92,400 | ₹4,13,400 | about ₹7.08 lakh |
| ₹25 lakh | ₹3,19,800 | ₹5,69,400 | about ₹8 lakh |
Salary means gross yearly salary, with no other income. Tax includes 4% cess, for a resident employee under 60 in FY 2026-27. Break-even is the smallest total of deductions (beyond the standard deduction) at which the old regime's tax is no higher than the new regime's, rounded. Worked out with our income tax calculator, which matched the Income Tax Department's calculator at every level we tested.
The slabs side by side
| Taxable income | New regime | Old regime (under 60) |
|---|---|---|
| Up to ₹2.5 lakh | Nil | Nil |
| ₹2.5 lakh to ₹4 lakh | Nil | 5% |
| ₹4 lakh to ₹5 lakh | 5% | 5% |
| ₹5 lakh to ₹8 lakh | 5% | 20% |
| ₹8 lakh to ₹10 lakh | 10% | 20% |
| ₹10 lakh to ₹12 lakh | 10% | 30% |
| ₹12 lakh to ₹16 lakh | 15% | 30% |
| ₹16 lakh to ₹20 lakh | 20% | 30% |
| ₹20 lakh to ₹24 lakh | 25% | 30% |
| Above ₹24 lakh | 30% | 30% |
Under the new regime, the 87A rebate makes taxable income up to ₹12 lakh tax-free. With the ₹75,000 standard deduction, that's a salary of ₹12.75 lakh. Under the old regime, the rebate covers taxable income up to ₹5 lakh.
What you give up in the new regime
- HRA exemption, LTA and most other allowances
- 80C (EPF, PPF, ELSS, insurance, home loan principal) and your own NPS under 80CCD(1B)
- 80D health insurance, 80E education loan interest, 80G donations
- Interest on a home loan for a house you live in
The new regime still allows the ₹75,000 standard deduction and your employer's NPS contribution (up to 14% of basic + DA).
Can you switch every year?
Yes, if you have no business or professional income, but only in a return filed by the due date (31 July for most salaried people). File late and you're taxed under the new regime for that year. Within the due date, you choose when you file, even if you told your employer something else.
If you have business or professional income, the rules are different: you opt out using Form 10-IEA, and you can switch back only once. See the Income Tax Department's FAQ.
Compare both regimes with your own salary and deductions.
Open the income tax calculatorSources
- Tax rules for salaried individuals, AY 2026-27, Income Tax Department
This guide explains the rules in general. For your own situation, .