Old vs New Income Tax Regime — Which Saves More in FY 2026-27?

The new tax regime is better for most Indians earning up to ₹12L (effectively zero tax with ₹75K standard deduction + rebate under 87A). The old regime only wins if your total deductions (80C + 80D + HRA + home loan interest) exceed ₹3.75-4.25L. The breakeven point varies by salary structure, but roughly: below ₹15L, new regime wins for most; above ₹20L with full deductions, old regime can save ₹30K-1L more.

Last updated: 2026-04-06

Side-by-Side Comparison

Dimension	📋 Old Tax Regime	✨ New Tax Regime (Default FY 2026-27)
Standard deduction	₹50,000	✓₹75,000
Section 80C (₹1.5L)	✓Allowed	Not allowed
HRA exemption	✓Allowed	Not allowed
Home loan interest (Sec 24)	✓Up to ₹2L deduction	Not allowed
Tax slabs (₹0-3L)	Nil	Nil
Tax on ₹12L income (no deductions)	~₹1.17L	✓₹0 (87A rebate)
Tax on ₹20L income (₹4L deductions)	✓~₹2.34L	~₹2.55L
Simplicity	Complex — track multiple proofs	✓Simple — no proofs needed

Standard deduction

📋 Old Tax Regime

₹50,000

✨ New Tax Regime (Default FY 2026-27)

✓ ₹75,000

Section 80C (₹1.5L)

📋 Old Tax Regime

✓ Allowed

✨ New Tax Regime (Default FY 2026-27)

Not allowed

HRA exemption

📋 Old Tax Regime

✓ Allowed

✨ New Tax Regime (Default FY 2026-27)

Not allowed

Home loan interest (Sec 24)

📋 Old Tax Regime

✓ Up to ₹2L deduction

✨ New Tax Regime (Default FY 2026-27)

Not allowed

Tax slabs (₹0-3L)

📋 Old Tax Regime

Nil

✨ New Tax Regime (Default FY 2026-27)

Nil

Tax on ₹12L income (no deductions)

📋 Old Tax Regime

~₹1.17L

✨ New Tax Regime (Default FY 2026-27)

✓ ₹0 (87A rebate)

Tax on ₹20L income (₹4L deductions)

📋 Old Tax Regime

✓ ~₹2.34L

✨ New Tax Regime (Default FY 2026-27)

~₹2.55L

Simplicity

📋 Old Tax Regime

Complex — track multiple proofs

✨ New Tax Regime (Default FY 2026-27)

✓ Simple — no proofs needed

Verdict

The new regime is the default and best choice for 80%+ of Indian taxpayers, especially those with income below ₹15L or those who do not have home loans/HRA. The old regime rewards disciplined savers with ₹3.75L+ in genuine deductions — typically salaried individuals with a home loan, HRA, and maxed-out 80C/80D. Always run the numbers for your specific salary structure before choosing.

Best For

📋Old Tax Regime

High deduction claimers: home loan + HRA + 80C/80D totalling ₹3.75L+

✨New Tax Regime (Default FY 2026-27)

Most salaried Indians, especially those under ₹15L with few deductions

Related Calculators

🧮Income Tax Calculator 🏘️HRA Calculator 💼Salary Calculator

Frequently Asked Questions

What is the breakeven deduction amount between old and new regime?+

For most salary levels, you need total deductions of ₹3.75-4.25L for the old regime to break even with the new regime. This typically requires a combination of home loan interest (₹2L), HRA (₹1-2L), and 80C (₹1.5L).

Can I switch between old and new regime every year?+

Salaried individuals can switch every year. Business/profession income holders can switch only once in a lifetime from new to old (and cannot switch back).

Is the ₹12L tax-free limit real under the new regime?+

Yes, for FY 2025-26 onwards. With the ₹75K standard deduction, taxable income up to ₹12L qualifies for full rebate under Section 87A, making effective tax zero. Above ₹12L, normal slab rates apply on the full income.

What deductions are still allowed in the new regime?+

The new regime allows: ₹75K standard deduction, employer NPS contribution (80CCD(2) up to 14%), Agniveer contribution (80CCH), and transport allowance for disabled employees. All other deductions (80C, 80D, HRA, home loan interest) are disallowed.

Disclaimer: This comparison is for informational purposes only and does not constitute financial advice. Historical returns are not indicative of future performance. Tax rules are as per FY 2026-27 and may change. Consult a SEBI-registered financial advisor before making investment decisions.