# Old vs New Tax Regime FY 2026-27: Which Should You Pick? > How to choose between the old and new tax regimes for FY 2026-27: break-even deductions at each salary, worked examples, and when switching is allowed. Source: https://trykosh.com/learn/old-vs-new-tax-regime-fy-2026-27 Guide - Income tax # Old vs new tax regime for FY 2026-27: how to pick the right one The new regime is the default and, for most salaried people, the cheaper one. The old regime still wins when your deductions are large enough. This guide shows how large, with real numbers, and how to make the choice without guessing. Updated 25 October 20267 min readBy the Kosh team On this page[The short answer](#short-answer)[What each regime gives you](#what-each-gives)[The break-even: how much in deductions the old regime needs](#break-even)[Two worked examples](#worked-examples)[How to decide, step by step](#how-to-decide)[Switching rules and edge cases](#switching)[A note on the next few years](#looking-ahead)[FAQs](#faq) ## The short answer For FY 2026-27 (tax year 2026-27, the first year under the Income-tax Act, 2025), Budget 2026 left both regimes' slabs unchanged. The **new regime** has lower rates, a INR 75,000 standard deduction and a rebate that makes taxable income up to INR 12 lakh tax-free, but it allows almost no deductions. The **old regime** has higher rates and a INR 50,000 standard deduction, and in exchange lets you subtract HRA, 80C, 80D, home-loan interest and more. So the question is never "which regime is better" in general. It's "are my deductions big enough to make up for the old regime's higher rates?" Below about INR 13 lakh of salary the answer is almost always no. Above that it depends on your rent, your home loan and how much you already invest. ## What each regime gives you Old vs new regime, FY 2026-27, for a salaried resident below 60 New regime (default) Old regime Slabs 0% up to INR 4 lakh, then 5%, 10%, 15%, 20%, 25% in INR 4 lakh steps, 30% above INR 24 lakh 0% up to INR 2.5 lakh, 5% to INR 5 lakh, 20% to INR 10 lakh, 30% above Standard deduction INR 75,000 INR 50,000 87A rebate Up to INR 60,000: tax-free up to INR 12 lakh taxable, with marginal relief just above Up to INR 12,500: tax-free up to INR 5 lakh taxable, no marginal relief HRA, 80C, 80D, 80CCD(1B) Not allowed Allowed Home-loan interest, self-occupied Not allowed Up to INR 2 lakh Employer NPS, 80CCD(2) Up to 14% of basic Up to 10% of basic Highest surcharge 25% (income above INR 2 crore) 37% (income above INR 5 crore) Two items work in both regimes and are easy to forget: the standard deduction, and your employer's NPS contribution. Everything else on the old-regime side has to be earned with rent receipts, investments or loan certificates. The full slab tables are in our [income tax slabs guide](/learn/income-tax-slabs-fy-2026-27). ## The break-even: how much in deductions the old regime needs Because the new regime's rates are lower, the old regime only wins once your deductions cross a certain amount. That amount depends on your salary. We ran each salary below through the [old vs new regime calculator](/tools/old-vs-new-tax-regime-calculator) with no deductions at all, then found the extra old-regime deductions (beyond the INR 50,000 standard deduction) at which the two regimes cost the same. Tax with only the standard deduction, and the old-regime deductions needed to break even (FY 2026-27, below 60) Gross salary New regime tax Old regime tax Old-regime deductions needed to match INR 10 lakh INR 0 INR 1,06,600 INR 4.5 lakh INR 12.75 lakh INR 0 INR 1,87,200 INR 7.25 lakh INR 15 lakh INR 97,500 INR 2,57,400 about INR 5.44 lakh INR 20 lakh INR 1,92,400 INR 4,13,400 about INR 7.08 lakh INR 25 lakh INR 3,19,800 INR 5,69,400 about INR 8 lakh INR 30 lakh INR 4,75,800 INR 7,25,400 about INR 8 lakh Read the last column as a hurdle. At INR 15 lakh you need more than INR 5.4 lakh of deductions, which means maxing 80C (INR 1.5 lakh) and 80D (INR 25,000) and still finding over INR 3.5 lakh more from HRA or a home loan. From about INR 25 lakh upward the hurdle settles at roughly **INR 8 lakh**, because both regimes are then taxing your top slice at 30%. **The INR 12.75 lakh line** Up to INR 12.75 lakh of salary, the new regime charges nothing. To beat zero, the old regime would need to bring your taxable income down to INR 5 lakh, which almost nobody can do. If you earn in this range, the new regime is the answer. ## Two worked examples ### Priya, INR 15 lakh in Pune: the new regime wins Priya's basic is INR 6 lakh. She gets INR 2.4 lakh of HRA and pays INR 20,000 a month in rent, invests the full INR 1.5 lakh under 80C and pays INR 25,000 for health insurance. That's INR 3.55 lakh of deductions on top of the standard deduction. In the old regime her taxable income is INR 10,95,000 and her tax is **INR 1,46,640**. In the new regime her taxable income is INR 14,25,000 and her tax is **INR 97,500**. The new regime saves her INR 49,140, even though she is claiming every common deduction. She'd need about INR 1.89 lakh more in deductions for the old regime to catch up. ### Rahul, INR 25 lakh in Mumbai with a home loan: the old regime wins Rahul's basic is INR 10 lakh and his HRA is INR 5 lakh. He pays INR 50,000 a month in rent for the flat he lives in, while his own flat, bought with a loan in another city, stays empty because his job keeps him in Mumbai (the law treats it like a self-occupied home). He claims INR 1.5 lakh under 80C, INR 50,000 of his own NPS under 80CCD(1B), INR 75,000 under 80D (his parents are over 60) and INR 2 lakh of home-loan interest. His old-regime deductions add up to INR 10.25 lakh including the standard deduction, taxable income falls to INR 14,75,000, and his tax is **INR 2,65,200**. The new regime would charge **INR 3,19,800**. The old regime saves him INR 54,600. Without the home loan, Rahul's old-regime tax would be INR 3,27,600 and the new regime would win by INR 7,800. One deduction swings the answer, which is why you should run your own numbers rather than follow a rule of thumb. ## How to decide, step by step 1. **List what you can genuinely claim.** HRA (only if you pay rent and get HRA), 80C (EPF already counts), 80D premiums, NPS, home-loan interest on a self-occupied home, education-loan interest. Use the [HRA calculator](/tools/hra-exemption-calculator) for the exempt part of HRA, not the HRA you receive. 2. **Run both regimes on the same numbers.** The [income tax calculator](/tools/income-tax-calculator) shows the two side by side and how many more rupees of deductions the old regime would need. 3. **Don't count deductions you'd have to buy.** If the old regime only wins after you buy a INR 50,000 insurance policy you don't need, it doesn't really win. Count only what you'd do anyway. 4. **Tell your employer in April.** Your choice decides how much TDS comes out of each month's salary. If you don't declare, the employer assumes the new regime. 5. **Confirm the choice when you file.** A salaried person without business income can pick either regime in the ITR each year, as long as the return is filed by the due date. [Free tool**Old vs new regime calculator**Find out which regime leaves you more money this year, and exactly how many more rupees of deductions the old regime would need to catch up.](/tools/old-vs-new-tax-regime-calculator)[Free tool**Income tax calculator**Work out your income tax for FY 2026-27 under both regimes in one go. Kosh applies the current slabs, the INR 75,000 standard deduction, the 87A rebate, surcharge with marginal relief and 4% cess.](/tools/income-tax-calculator)[Free tool**HRA exemption calculator**Work out how much of your house rent allowance is tax-free, which of the three limits applies to you, and how much stays taxable.](/tools/hra-exemption-calculator)[Free tool**80C calculator**Add up what already counts toward 80C, see how much of the INR 1.5 lakh limit is left, and what filling it would save at your slab.](/tools/section-80c-calculator)[Free tool**Home loan tax benefit calculator**See how much your home loan cuts your tax this year, whether the house is self-occupied or rented out, and in which regime.](/tools/home-loan-tax-benefit-calculator) ## Switching rules and edge cases - **Salaried, no business income:** you can change regime every year. The choice you give your employer only affects TDS; the regime you pick in your return is what counts. If the employer deducted too little, pay the difference as self-assessment tax before filing. - **Filing late costs you the choice.** The old regime has to be chosen in a return filed by the due date (31 July for ITR-1 and ITR-2 filers, which covers most salaried people). A belated return is taxed under the new regime. - **Business or professional income:** freelancers and business owners can leave the new regime by filing a form before the due date, but switching back and forth is restricted to once. Pick with care. See the [freelancer tax guide](/learn/freelancer-tax-guide-india). - **Employer NPS works in both.** If your employer offers NPS through salary restructuring, up to 14% of basic is deductible in the new regime. It's the one big lever left for new-regime filers. See [how to save tax on salary](/learn/how-to-save-tax-on-salary). - **Capital gains don't change the comparison much.** Equity gains are taxed at special rates in both regimes, and the 87A rebate can't be used against them. - **Senior citizens:** the old regime's basic exemption is INR 3 lakh at 60 to 79 and INR 5 lakh at 80 and above; the new regime's slabs are the same at every age. Run the [senior citizen calculator](/tools/income-tax-calculator-for-senior-citizens). ## A note on the next few years Every recent Budget has made the new regime more attractive and left the old one alone. If you're deciding whether to take on a long commitment purely for an old-regime deduction (a 15-year insurance policy, say), assume the deduction may matter less in future. Commitments you'd make anyway, like a home loan for a home you want, are a different matter. ## Frequently asked questions Which tax regime is better for FY 2026-27? For most salaried people the new regime costs less, because its lower rates and INR 12 lakh rebate outweigh the deductions they give up. The old regime wins only when deductions are large, typically more than INR 5 lakh to INR 8 lakh beyond the standard deduction depending on salary. Run both on your own numbers before deciding. Can I switch from the new regime to the old regime every year? Yes, if you have no business or professional income. Salaried people choose the regime in each year's return, provided it is filed by the due date. People with business income can switch out of and back into the new regime only once. Is salary up to INR 12.75 lakh tax-free in the new regime? Yes, for a salaried resident. The INR 75,000 standard deduction brings INR 12.75 lakh down to INR 12 lakh of taxable income, and the 87A rebate cancels the INR 60,000 of tax on it. Above that, marginal relief keeps the tax from exceeding the income above INR 12 lakh. Can I claim HRA and 80C in the new tax regime? No. HRA exemption, 80C, 80D, 80CCD(1B) and interest on a self-occupied home loan are old-regime benefits. The new regime keeps the standard deduction and the employer's NPS contribution up to 14% of basic. What if I told my employer the wrong regime? It only affects how much TDS was deducted. You can choose the other regime in your income tax return if you file by the due date. If the TDS was too low for the regime you pick, pay the balance as self-assessment tax before filing. Does the old regime make sense with a home loan? Often, but not always. Home-loan interest of up to INR 2 lakh on a self-occupied home plus principal under 80C can lift total deductions past the break-even point, especially with HRA or high 80D. Without other deductions, the new regime can still win even with a home loan. ## Sources - [Income Tax Department](https://www.incometax.gov.in/) - [Union Budget 2026-27](https://www.indiabudget.gov.in/) Written by the Kosh team and checked against the rules in force on 25 October 2026. This guide is general information, not tax, legal or investment advice. Kosh is an educational financial planning tool by Primedepth Labs. It is not a SEBI-registered investment adviser and does not offer personalised investment advice, hold your money or execute trades. Markets carry risk; read scheme documents carefully and consult a registered adviser before acting. ## Upload your statement and Kosh does this for you. Kosh reads your bank and card statements, works out your tax under both regimes and turns guides like this one into your own numbers and next steps. [Start free](/signup?via=learn-old-vs-new-tax-regime-fy-2026-27)