Quick answer
Which tax regime is better for FY 2026-27?
For most salaried people, the new regime. Salary up to ₹12.75 lakh pays no tax under it, and above that the old regime wins only if your deductions are large: about ₹5.4 lakh at a ₹15 lakh salary and about ₹8 lakh at ₹25 lakh or more.
The short version
- Salary up to ₹12.75 lakh: the new regime gives zero tax, so it wins in almost every case.
- Above that: add up your old-regime deductions (HRA exemption, 80C, 80D, NPS 80CCD(1B), home loan interest and others). If the total is above the figure in the table below, the old regime gives lower tax.
Budget 2026 made no change to slabs, so these figures are the same as FY 2025-26.
Deductions you need for the old regime to win
| Gross salary | Tax in the new regime | Old regime is better if your deductions are more than |
|---|---|---|
| ₹13 lakh | ₹26,000 | about ₹6.9 lakh |
| ₹15 lakh | ₹97,500 | about ₹5.4 lakh |
| ₹18 lakh | ₹1,50,800 | about ₹6.4 lakh |
| ₹20 lakh | ₹1,92,400 | about ₹7.1 lakh |
| ₹25 lakh and above | ₹3,19,800 at ₹25 lakh | about ₹8 lakh |
For a resident below 60 with only salary income, worked out with our calculator. Deductions here exclude the standard deduction, which is ₹75,000 in the new regime and ₹50,000 in the old. Tax includes 4% cess.
Why does ₹13 lakh need more deductions than ₹15 lakh? Because just above ₹12 lakh, the new regime's marginal relief keeps the tax very low, so the old regime has more to beat.
What you give up in the new regime
- HRA exemption and leave travel allowance
- 80C (PF, PPF, ELSS, insurance, tuition fees, home loan principal), 80D, 80E and most other deductions
- Interest on a home loan for a self-occupied house
Still allowed in the new regime: the ₹75,000 standard deduction and your employer's NPS contribution (up to 14% of basic pay).
Can you switch?
If you have no business income, you can choose either regime every year when you file your return, whatever you declared to your employer. But the choice must be made in a return filed by the due date. A belated return is filed under the new regime. If you have business or professional income, switching back and forth is restricted.
Try your own figures in our income tax calculator, which shows both regimes side by side.
Need help with this?
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