Old vs New Tax Regime 2026 – Which Is Better?
Calculate exactly which tax regime saves you more tax in FY 2025–26. Enter your income and deductions, see tax under both regimes, and get a clear recommendation. Updated with Budget 2026 slabs.
Old Regime
Taxable income: ₹6,25,000
Tax payable: ₹37,500
New Regime
Taxable income: ₹11,25,000
Tax payable: ₹75,000
Your saving Pick Old
Old regime saves you ₹37,500 per year
Tax Slabs 2026 (Budget FY 2025–26)
Old Tax Regime
| Income | Rate |
|---|---|
| Up to ₹2.5 L | 0% |
| ₹2.5 L – ₹5 L | 5% |
| ₹5 L – ₹10 L | 20% |
| Above ₹10 L | 30% |
Standard deduction: ₹50,000
Rebate u/s 87A: up to income ₹5 lakh (full rebate)
New Tax Regime (default)
| Income | Rate |
|---|---|
| Up to ₹3 L | 0% |
| ₹3 L – ₹7 L | 5% |
| ₹7 L – ₹10 L | 10% |
| ₹10 L – ₹12 L | 15% |
| ₹12 L – ₹15 L | 20% |
| Above ₹15 L | 30% |
Standard deduction: ₹75,000
Rebate u/s 87A: up to income ₹7 lakh (full rebate)
Deductions: What's Allowed vs Not
| Deduction | Old Regime | New Regime |
|---|---|---|
| Standard deduction | ✔ (₹50K) | ✔ (₹75K) |
| 80C (up to ₹1.5 L) — EPF, PPF, ELSS, LIC etc. | ✔ | ✘ |
| 80D (health insurance up to ₹25K / ₹50K seniors) | ✔ | ✘ |
| 80CCD(1B) — Extra NPS ₹50K | ✔ | ✘ |
| 80CCD(2) — Employer NPS contribution | ✔ | ✔ |
| HRA exemption (salaried) | ✔ | ✘ |
| Home loan interest (24b) — self-occupied | ✔ (up to ₹2L) | ✘ |
| Home loan interest — let-out property | ✔ (full) | ✔ |
| 80E (education loan interest) | ✔ (unlimited) | ✘ |
| LTA (Leave Travel Allowance) | ✔ | ✘ |
| Rebate u/s 87A | ✔ (income below ₹5L) | ✔ (income below ₹7L) |
Break-even Analysis: When Does Old Regime Win?
Approximate break-even (if total eligible deductions exceed this amount, old regime saves more):
| Annual Income | Deductions threshold | Typical verdict |
|---|---|---|
| ₹5-7 L | Not applicable (both regimes use 87A rebate) | Either — new regime slightly simpler |
| ₹7-10 L | ~₹2.5 L | New regime typically wins unless high HRA + 80C |
| ₹10-15 L | ~₹3.5 L | Depends on deductions — use calculator |
| ₹15-20 L | ~₹4 L | Old regime often wins for salaried with HRA |
| Above ₹20 L | ~₹5 L+ | Depends heavily on home loan + HRA |
Who Should Pick Old Regime?
- Salaried in metros with HRA exemption of ₹2L+/year
- Home loan interest ₹2L/year under 80C + 24b
- Fully invested in 80C (₹1.5L) + 80D (₹25K) + 80CCD(1B) (₹50K)
- Earning >₹15 lakh with disciplined tax planning
- Education loan borrowers (full 80E interest deduction)
Who Should Pick New Regime?
- Young professionals with limited deductions
- Income between ₹5–₹7 lakh (benefit from ₹7L rebate under 87A)
- No HRA (self-owned property without loan, or staying with family)
- Prefer simplicity over maximum tax saving
- Have high-value employer NPS (80CCD(2)) — still allowed in new regime
Frequently Asked Questions
Which is better — old or new tax regime?
Rule of thumb: if total deductions exceed ₹3.5–4 lakh, old regime wins. Below that, new regime. Use the calculator above for your exact numbers.
What are the new tax regime slabs for 2026?
0–3L: 0%, 3–7L: 5%, 7–10L: 10%, 10–12L: 15%, 12–15L: 20%, above 15L: 30%. Standard deduction ₹75K. Rebate u/s 87A up to ₹7L income.
Can I switch regimes every year?
Salaried: yes, every year when filing ITR. Business/profession income: one-time switch from new to old; cannot switch back.
Is HRA allowed in new tax regime?
No. HRA exemption, 80C, 80D, home loan interest (self-occupied), 80E, LTA — all excluded under the new regime.
Does new regime allow NPS 80CCD(1B)?
No, the additional ₹50K NPS deduction (80CCD(1B)) is not available under new regime. However, employer contribution under 80CCD(2) IS allowed in both regimes.