Old vs new tax regime FY 2026-27 — which saves you more?
Since FY 2023-24, the new tax regime became the default. Every April, millions of salaried employees either miss the deadline to choose their regime or pick the wrong one and overpay tax. This guide helps you decide — with a quick calculator below.
The slabs side by side
| Income slab | Old regime | New regime (default) |
|---|---|---|
| Up to ₹3 lakh | Nil | Nil |
| ₹3L – ₹6L | 5% | 5% |
| ₹6L – ₹9L | 10% | 10% |
| ₹9L – ₹12L | 15% | 15% |
| ₹12L – ₹15L | 20% | 20% |
| Above ₹15L | 30% | 30% |
The slabs look identical — so why does it matter? Because the old regime allows deductions that reduce your taxable income before applying these slabs. The new regime doesn't.
Deductions available ONLY in old regime
| Deduction | Max amount | Who uses it |
|---|---|---|
| 80C (PF, ELSS, LIC, PPF, home loan principal) | ₹1,50,000 | Almost everyone |
| 80D (health insurance premium) | ₹25,000–₹50,000 | Anyone with health insurance |
| HRA exemption | Varies | Salaried, paying rent |
| Standard deduction | ₹50,000 | All salaried |
| Home loan interest (Section 24b) | ₹2,00,000 | Home loan holders |
| NPS employer contribution (80CCD2) | 10% of basic | Govt / some private |
| LTA (Leave Travel Allowance) | Actual travel cost | Salaried with LTA |
Quick breakeven calculator
Which regime saves you more?
Real examples
| Profile | Old regime tax | New regime tax | Better choice |
|---|---|---|---|
| ₹8L salary, no deductions | ₹54,600 | ₹54,600 | New (simpler) |
| ₹10L salary, 80C + HRA + 80D | ₹52,500 | ₹75,400 | Old (saves ₹22,900) |
| ₹15L salary, no deductions | ₹1,95,000 | ₹1,50,000 | New (saves ₹45,000) |
| ₹15L salary, full 80C + HRA + home loan | ₹78,000 | ₹1,50,000 | Old (saves ₹72,000) |
| ₹20L salary, no deductions | ₹3,07,500 | ₹2,40,000 | New (saves ₹67,500) |
Simple rule of thumb
- If your deductions exceed ₹3.75 lakh — old regime almost always wins
- If your deductions are below ₹1.5 lakh — new regime is likely better
- If you have no deductions at all — new regime, no question
- If you pay rent + have 80C + health insurance — calculate properly, old regime often wins up to ₹15L
When to declare your regime choice
Through employer (TDS): April of each financial year. Submit Form 12BB with your choice. Your employer deducts TDS accordingly for the whole year.
At ITR filing: You can switch at the time of filing your return. Salaried employees can switch once per year. This is your last chance to pick the better regime for that year.
Deadline: ITR filing deadline is typically July 31. After that, you're locked into whatever regime your employer applied.