Old vs new tax regime 2026-27: break-even deductions at every salary level

For most salaried people in tax year 2026-27, the new regime is cheaper unless they can claim a large amount of old-regime deductions and exemptions. At a gross salary of ₹15 lakh you need about ₹5.44 lakh of claims beyond the ₹50,000 standard deduction (HRA exemption, 80C-type investments, health insurance, NPS, home loan interest) before the old regime matches the new. At ₹25 lakh and above the break-even settles at ₹8 lakh. Up to ₹12.75 lakh of salary the new regime charges nil tax, so the old regime cannot beat it. The tables below show the break-even point at each income level, with the arithmetic.

This comparison covers residents below 60 with only slab-rate income. Senior citizens, people with business income and anyone with large capital gains should read the notes at the end.

The two regimes side by side

The new regime also has a bigger standard deduction (₹75,000 against ₹50,000) and a much larger rebate (nil tax up to ₹12 lakh of total income against ₹5 lakh). The old regime's only advantage is the long list of deductions and exemptions it keeps. Our new regime slab guide covers the rebate rules in detail.

Break-even table for salaried taxpayers

"Break-even claims" means the total of deductions and exemptions, in addition to the old regime's ₹50,000 standard deduction, at which old-regime tax equals new-regime tax. If your genuine claims are higher, the old regime is cheaper. All figures include 4% cess and ignore surcharge.

Up to about ₹12.75 lakh the old regime only "breaks even" by bringing tax down to nil too, which requires the claims shown. Beyond ₹24 lakh of income both regimes charge 30% at the margin, so the gap stops growing and the break-even stays at ₹8 lakh.

How the ₹15 lakh row is worked out. New regime: ₹15,00,000 − ₹75,000 = ₹14,25,000; slab tax ₹20,000 + ₹40,000 + (₹2,25,000 × 15%) = ₹93,750; with cess ₹97,500. Old regime with ₹5,43,750 of claims: ₹15,00,000 − ₹50,000 − ₹5,43,750 = ₹9,06,250; slab tax ₹12,500 + (₹4,06,250 × 20%) = ₹93,750; with cess ₹97,500. Equal.

What counts towards the old-regime claims

Add only what you can document for tax year 2026-27:

• Investment deduction (old 80C, now section 123): up to ₹1.5 lakh. Employee PF counts, so many employees reach part of this without extra investment.
• Health insurance (old 80D, now section 126): ₹25,000 for self and family (₹50,000 if you are a senior citizen), plus up to ₹25,000 or ₹50,000 for parents depending on their age.
• Own NPS contribution: the extra ₹50,000 over the ₹1.5 lakh limit.
• HRA exemption: often the largest item for renters in cities. See the HRA calculation guide.
• Home loan interest on a self-occupied house: up to ₹2 lakh. See the home loan guide.
• Professional tax: up to ₹2,500 a year, depending on your state.
• Smaller items: education loan interest, donations, savings interest up to ₹10,000 and others.

Employer NPS contributions are allowed in both regimes (more generously in the new), so leave them out of the comparison.

Three illustrative taxpayers

1. Profile A: ₹10 lakh salary, PF ₹60,000, no rent. Claims ₹60,000. Break-even is ₹4.5 lakh. New regime: nil tax. Old regime: ₹10,00,000 − ₹50,000 − ₹60,000 = ₹8,90,000 total income, tax ₹12,500 + ₹78,000 = ₹90,500, with cess ₹94,120. The new regime wins clearly.
2. Profile B: ₹18 lakh salary, renting in Mumbai, no home loan. Claims: HRA exemption ₹3,00,000, investments ₹1,50,000, health insurance ₹25,000 plus ₹50,000 for senior parents, NPS ₹50,000, professional tax ₹2,500: total ₹5,77,500. Break-even is about ₹6.42 lakh, so the new regime is still cheaper by roughly ₹20,000.
3. Profile C: ₹25 lakh salary, high rent, new home loan, senior parents. Claims ₹8.5 lakh. Above the ₹8 lakh break-even, so the old regime saves about ₹50,000 × 31.2% = ₹15,600.

Redo the sums with your own numbers in the old regime calculator and the new regime calculator.

Switching rules

• No business or professional income: you can choose either regime each year. The old regime is available only in a return filed by the due date, so file on time if you want it.
• Business or professional income: opting out of the new regime carries forward to later years, and you get only one chance to switch back.
• Employer TDS: your declaration to the employer sets monthly TDS only. If you choose differently in the return, you pay the balance or get a refund.

Notes for special cases

• Senior citizens in the old regime get a higher basic exemption (₹3 lakh, or ₹5 lakh at 80+), which lowers the break-even slightly.
• Capital gains at special rates are taxed the same way in both regimes, but the new regime's ₹12 lakh rebate does not cover them. See the capital gains guide.
• Incomes above ₹50 lakh: surcharge is capped at 25% in the new regime, against up to 37% in the old.

This page is part of the tax year 2026-27 overview. For a full calculation including other income, see the worked examples.

Frequently asked questions

Should I invest in tax-saving products just to use the old regime?

Only if you would make those investments anyway and your claims clear the break-even. Investing ₹1.5 lakh to save ₹46,800 makes no sense if the new regime is cheaper anyway.

I told my employer "new regime". Can I still file under the old?

Yes, if you have no business income and file by the due date. You will usually have to pay extra tax with the return.

Does the break-even change if I have interest income?

Slightly. Extra slab-rate income moves you along the table. Add it to salary and read the matching row.

Is the old regime being abolished?

It remains available for tax year 2026-27 under the Income-tax Act, 2025. Future Finance Acts may change this, so check each year.

Sources

• Income Tax Department: section 202 of the Income-tax Act, 2025 and the old regime rate tables
• Income Tax e-filing portal: official tax calculator and the regime option in return forms
• India Code: text of the Act