Old or new tax regime: which saves you more? (Tax year 2026-27)
Compare both regimes using your own numbers. The new regime has lower rates and zero tax up to ₹12 lakh of taxable income; the old regime allows deductions like HRA, investments and home-loan interest.
The new regime saves you ₹1,11,800 a year
Estimated yearly tax: new regime ₹0, old regime ₹1,11,800.
Why
- New regime: taxable income ₹11,25,000 after the standard deduction, tax ₹0.
- Old regime: deductions of ₹2,25,000 bring taxable income to ₹9,75,000, tax ₹1,11,800.
- Your taxable income is within the new regime’s ₹12 lakh rebate limit, so the new regime tax is zero.
| New regime | Old regime | |
|---|---|---|
| Gross income | ₹12,00,000 | ₹12,00,000 |
| Deductions | ₹75,000 | ₹2,25,000 |
| Taxable income | ₹11,25,000 | ₹9,75,000 |
| Tax on slabs | ₹52,500 | ₹1,07,500 |
| Rebate / marginal relief | − ₹52,500 | − ₹0 |
| Surcharge | ₹0 | ₹0 |
| Health & education cess (4%) | ₹0 | ₹4,300 |
| Total tax | ₹0 | ₹1,11,800 |
| Effective rate | 0% | 9.3% |
Next steps
- Tell your employer which regime to use for TDS at the start of the year (you can still choose when filing your return if you have no business income).
- Keep proofs of investments, rent and insurance if you choose the old regime.
- Add income-tax due dates (advance tax, return filing) to your calendar.
- Check with the official income tax calculator before filing.
Estimate for resident individuals. Excludes capital gains and other special-rate income, employer NPS and agricultural income. Not tax advice.
Common questions
Is income up to ₹12 lakh tax-free in the new regime?
For resident individuals, yes: taxable income up to ₹12 lakh gets a full rebate. A salaried person also gets the ₹75,000 standard deduction, so a salary of up to ₹12.75 lakh pays no tax if there is no other special-rate income.
Can I switch between the old and new regime every year?
If you have no business income, you can choose each year when you file your return. If you have business or professional income, switching back to the old regime is restricted. Check the current rules before filing.
Which deductions are allowed in the new regime?
Mainly the standard deduction for salary and a few others such as the employer’s NPS contribution. HRA, investments, health insurance and home-loan interest on a self-occupied house are only in the old regime.
Is this an official calculation?
No. It is an estimate for planning, using the slabs listed with their sources below. Special-rate income such as capital gains is not included. Confirm with the Income Tax Department’s calculator or a tax professional.
Sources and last check
We list every rate, limit and date this page relies on, where it comes from and when we last checked it. Rules change: please confirm on the official website before you act. Spotted something out of date? Tell us.
- Income tax: new regime, tax year 2026-27Verified 13 Oct 2026
The Income-tax Act 2025 applies from 1 April 2026 and uses "tax year" in place of FY/AY. Rebate (now section 156) and marginal relief apply to resident individuals.
Union Budget 2026: slabs unchanged · Rebate under section 156, Income-tax Act 2025 · Income Tax Department
- Income tax: old regime, tax year 2026-27Verified 13 Oct 2026
Deduction caps shown use the familiar limits (investments ₹1.5 lakh, home-loan interest on a self-occupied house ₹2 lakh, additional NPS ₹50,000). Section numbers changed under the 2025 Act.
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