India's two income-tax regimes trade lower rates for fewer deductions. The right choice depends mostly on one number: how much you can genuinely claim in deductions.
The key differences (FY 2026-27)
| New regime | Old regime | |
|---|---|---|
| Standard deduction | ₹75,000 | ₹50,000 |
| Zero-tax income (with rebate) | Up to ₹12 lakh taxable | Up to ₹5 lakh taxable |
| Top slab | 30% above ₹24 lakh | 30% above ₹10 lakh |
| HRA, 80C, 80D, home-loan interest | Not allowed | Allowed |
| Employer NPS | Up to 14% of basic | Up to 10% of basic |
How much deduction makes the old regime win?
For a given gross salary, this is the total of old-regime deductions (HRA exemption, 80C, 80D, NPS, home-loan interest and similar, on top of the standard deduction) you would need before the old regime gives a lower tax bill than the new one:
| Gross salary | Old regime wins only if deductions exceed |
|---|---|
| ₹10 lakh | ₹4,50,000 |
| ₹12.75 lakh | ₹7,25,000 |
| ₹15 lakh | ₹5,44,000 |
| ₹20 lakh | ₹7,08,000 |
| ₹25 lakh | ₹8,00,000 |
| ₹30 lakh | ₹8,00,000 |
| ₹40 lakh | ₹8,00,000 |
| ₹50 lakh | ₹8,00,000 |
At salaries below about ₹12.75 lakh, the new regime is almost always better because the rebate makes tax zero. Above ₹25 lakh, you would need eight lakh or more in deductions, which is rare without a large home-loan interest claim.
A practical way to decide
- Add up your real deductions: rent (HRA), 80C investments including your PF, health insurance, NPS, home-loan interest.
- Compare with the table above for your salary.
- Or enter everything into our salary calculator, which compares both regimes and shows the difference in rupees.
Frequently asked questions
Which tax regime is better for me?
If you claim few deductions, the new regime usually wins, and income up to ₹12.75 lakh of salary is effectively tax-free. The old regime can win if your total deductions are large. Use the table above to see how large.
Can I switch between regimes every year?
Salaried employees can choose a regime each year when declaring to their employer and finally when filing the return. Rules differ for business income, so check with a professional.
Is HRA available in the new regime?
No. HRA exemption, 80C, 80D and home-loan interest on a self-occupied property are old-regime deductions.