Finance & Calculators 2 min read
Old vs New Tax Regime: Which Is Better for You? (With Break-even Numbers)
How to choose between the old and new tax regime in FY 2026-27, with real break-even figures, examples and a free calculator.
The old regime has high rates but lets you cut your taxable income with deductions. The new regime has lower rates and almost no deductions. Which one wins depends on how much you can deduct.
The quick rule
Add up all the deductions you can honestly claim in the old regime: 80C, 80D, NPS, HRA, home loan interest and the rest. If that number is big, the old regime can win. If it is small, the new regime almost always does.
Break-even numbers for FY 2026-27
We ran our calculator to find how much extra deduction (beyond the standard deduction) a salaried person needs for the old regime to match the new regime:
- ₹15 lakh salary: about ₹5.4 lakh of deductions
- ₹20 lakh salary: about ₹7.1 lakh of deductions
- Up to ₹12.75 lakh salary: the new regime means no tax at all, so the old regime cannot beat it
Those are large amounts. The 80C limit is ₹1.5 lakh, 80CCD(1B) adds ₹50,000, and home loan interest on a self-occupied house is capped at ₹2 lakh, so you need HRA and several of these together to get close.
Example: ₹15 lakh salary with deductions
Take a ₹15 lakh salary with ₹2 lakh of HRA exemption, ₹1.5 lakh in 80C, ₹50,000 in NPS and ₹25,000 for health insurance. The old regime tax comes to about ₹1,24,800. The new regime tax is ₹97,500. Even with ₹4.25 lakh of deductions, the new regime saves about ₹27,300.
Income Tax Calculator
Put in your own numbers to see which regime is cheaper.
When the old regime can still win
- You pay a lot of rent in a metro city and claim a big HRA exemption.
- You have a home loan with interest close to the ₹2 lakh limit, plus 80C and NPS.
- You are a senior citizen with a higher exemption limit and health insurance deductions.
Things to remember
- Salaried people can switch regimes every year. People with business income have stricter rules.
- Tell your employer which regime you choose, so they deduct the right TDS.
- Do not buy a financial product only to save tax. Choose it for the returns and the need.
Frequently asked questions
Can I switch between regimes every year?
Salaried people without business income can choose again each year. If you have business or professional income, the rules for switching are stricter.
Do I still need 80C investments in the new regime?
Not for tax. 80C does not apply in the new regime, so invest only if you need the product.
Is HRA allowed in the new regime?
No. HRA exemption is available only in the old regime.
