New vs Old Tax Regime: How to Choose
From FY 2026‑27 the new tax regime is the default. It offers wider slabs, a ₹75,000 standard deduction and a Section 87A rebate that makes salary up to ₹12.75 lakh completely tax-free — but it removes almost all exemptions and deductions. The old regime keeps narrower slabs and a smaller ₹50,000 standard deduction, but lets you claim Section 80C (up to ₹1.5 lakh), 80D health insurance, HRA and home-loan interest.
The maths comes down to one question: are your deductions large enough to beat the new regime's wider slabs? For most salaried people who only have EPF and a little insurance, the new regime wins comfortably. The old regime tends to win for people who max out 80C, pay significant rent and claim home-loan interest — often those in metro cities with a housing loan.
Rather than relying on rules of thumb, enter your own numbers above. The calculator applies the correct slabs, standard deduction, rebate, surcharge and 4% cess to both regimes and tells you precisely which one leaves more in your bank account each month. Review this every year: your deductions change, and so does the answer.
Source: Income Tax Department, Government of India (incometax.gov.in). Last updated July 29, 2026. Estimates only — not tax advice.
Frequently Asked Questions
Which tax regime is better, new or old?
It depends on your deductions. The new regime has wider slabs and a ₹75,000 standard deduction but no exemptions. The old regime allows 80C, 80D and HRA. As a rule of thumb, the old regime only wins once your total deductions are large — the calculator above shows your exact break-even.
What is the break-even deduction amount?
The break-even is the level of deductions at which both regimes give the same tax. Below it the new regime wins; above it the old regime does. This tool calculates your personal break-even automatically from your salary.
Can I switch between the new and old regime?
Salaried taxpayers without business income can choose their regime each financial year when filing. Those with business income are more restricted and can generally switch back only once. Check with a tax adviser for your situation.
Is the new regime the default in 2026?
Yes. The new tax regime is the default from FY 2026-27. If you want the old regime you must actively opt for it when declaring to your employer or filing your return.
Does the ₹12.75 lakh tax-free limit apply to both regimes?
No. The Section 87A rebate that makes salary up to ₹12.75 lakh tax-free (₹12 lakh income plus ₹75,000 standard deduction) applies to the new regime only. Under the old regime the rebate limit is ₹5 lakh of taxable income.