Every year salaried taxpayers face the same choice: the new tax regime with lower rates and few deductions, or the old regime with higher rates and many deductions. Budget 2026 did not change the slabs, and from 1 April 2026 the new Income-tax Act, 2025 replaces the 1961 Act. Section numbers have changed, but the way your tax is worked out for FY 2026-27 stays the same as last year.
New regime slabs (default)
| Taxable income | Rate |
|---|---|
| Up to ₹4 lakh | Nil |
| ₹4–8 lakh | 5% |
| ₹8–12 lakh | 10% |
| ₹12–16 lakh | 15% |
| ₹16–20 lakh | 20% |
| ₹20–24 lakh | 25% |
| Above ₹24 lakh | 30% |
Salaried people get a ₹75,000 standard deduction. A rebate of up to ₹60,000 means taxable income up to ₹12 lakh pays no tax, so a salary of up to ₹12.75 lakh is effectively tax-free. Employer contribution to NPS is still deductible.
Old regime slabs
| Taxable income (below 60) | Rate |
|---|---|
| Up to ₹2.5 lakh | Nil |
| ₹2.5–5 lakh | 5% |
| ₹5–10 lakh | 20% |
| Above ₹10 lakh | 30% |
The basic exemption is ₹3 lakh for senior citizens (60–79) and ₹5 lakh for those 80 and above. The standard deduction is ₹50,000, and income up to ₹5 lakh is tax-free after rebate. You can claim deductions such as 80C (up to ₹1.5 lakh), 80D health insurance, HRA, home loan interest (up to ₹2 lakh) and an extra ₹50,000 for NPS. Both regimes add 4% cess.
How much in deductions makes the old regime worthwhile?
The table shows, for each salary, the tax under the new regime and the total deductions (excluding the standard deduction) you would need under the old regime just to match it. If your deductions are below this figure, the new regime is better.
| Annual salary | New regime tax | Old regime deductions needed to break even |
|---|---|---|
| ₹10,00,000 | ₹0 | ₹4,50,000 |
| ₹12,75,000 | ₹0 | ₹7,25,000 |
| ₹15,00,000 | ₹97,500 | ₹5,44,000 |
| ₹20,00,000 | ₹1,92,400 | ₹7,08,000 |
| ₹25,00,000 | ₹3,19,800 | ₹8,00,000 |
| ₹30,00,000 | ₹4,75,800 | ₹8,00,000 |
Most salaried people claim 80C of ₹1.5 lakh and 80D of ₹25,000, a total of ₹1.75 lakh. That is well short of the break-even at every salary level above, so the new regime usually wins. The old regime still makes sense for people with a large home loan, high HRA and full use of 80C, 80D and NPS.
A worked example
Rahul earns ₹15 lakh. He invests ₹1.5 lakh under 80C and pays ₹25,000 for family health insurance. Under the new regime his tax is ₹97,500. Under the old regime it is ₹2,02,800. The new regime saves him ₹1,05,300, even after giving up his deductions.
Compare your own numbers in our Old vs New Regime calculator, or ask our tax team to check before you file.
