New vs old tax regime for tax year 2026-27
Feature-by-feature comparison of the default new regime and the old regime for individuals under the Income-tax Act, 2025.
Individuals pay tax under the new regime in section 202 of the Income-tax Act, 2025 unless they opt out into the old regime. The new regime has lower slab rates and a larger rebate but allows only a few deductions. The old regime has higher rates but keeps most deductions and exemptions. The table compares the rules, not any person's result. To see which regime suits your numbers, use the break-even table in the old vs new regime guide or the deduction tax-saving calculator.
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| Feature | New regime (default) | Old regime (opt-out) | What it means for you |
|---|---|---|---|
| Slab rates | Nil to ₹4 lakh; 5%, 10%, 15%, 20%, 25% in ₹4 lakh steps; 30% above ₹24 lakh | Nil to ₹2.5 lakh (₹3 lakh at 60+, ₹5 lakh at 80+); 5% to ₹5 lakh; 20% to ₹10 lakh; 30% above | The new regime is cheaper at the same taxable income at every level |
| Rebate for residents | Up to ₹60,000, so no tax on total income up to ₹12 lakh, with marginal relief just above | Up to ₹12,500, so no tax on total income up to ₹5 lakh | A salaried person earning up to about ₹12.75 lakh pays no tax under the new regime |
| Standard deduction (salary or pension) | ₹75,000 | ₹50,000 | ₹25,000 more off taxable income in the new regime |
| Investment deduction (old 80C, now section 123) | Not allowed | Up to ₹1.5 lakh | Worth up to ₹46,800 a year at the 30% slab plus cess |
| Health insurance (old 80D, now section 126) | Not allowed | Allowed within limits for self, family and parents | Senior parents' premiums add to the old regime's value |
| NPS | Employer contribution allowed (up to 14% of salary) | Employer contribution (up to 10%, 14% for government employers) plus your own contribution, with an extra ₹50,000 | Employer NPS is one of the few reliefs left in the new regime |
| HRA and home loan interest on a self-occupied home | Not allowed | HRA exemption and up to ₹2 lakh interest allowed | Renters in big cities and new home-loan borrowers are the most likely to gain from the old regime |
| Surcharge on very high incomes | Capped at 25% | Up to 37% above ₹5 crore | Matters only above ₹50 lakh of income |
| Switching | Default; salaried people choose each year in the return | For salaried people, only in a return filed by the due date; business owners can switch back only once | File late and you are taxed under the new regime |
Caveats. Rates and limits are as enacted for tax year 2026-27 (1 April 2026 to 31 March 2027) under the Income-tax Act, 2025 and may be amended by later Finance Acts. The 4% health and education cess applies on top of both regimes. Special-rate income such as short-term and long-term capital gains on listed equity is taxed at its own rates under both regimes. The rebate is limited to tax at the slab rates. Verify the current position on incometaxindia.gov.in and the e-filing portal incometax.gov.in. This comparison is general information, not tax advice.