Since FY 2023-24, the new tax regime under section 115BAC is the default for every Indian taxpayer — you have to actively opt OUT to remain on the old regime. With Budget 2025's rebate expansion (₹12 lakh effective tax-free income under the new regime), choosing wisely became more important than ever. This is the slab-by-slab, deduction-by-deduction comparison for AY 2026-27.
What are the income tax slabs under the new regime in 2026?
The new regime slabs (post Budget 2025) for AY 2026-27 are simpler and more graduated:
| Income range | Tax rate |
|---|---|
| Up to ₹4,00,000 | NIL |
| ₹4,00,001 – ₹8,00,000 | 5% |
| ₹8,00,001 – ₹12,00,000 | 10% |
| ₹12,00,001 – ₹16,00,000 | 15% |
| ₹16,00,001 – ₹20,00,000 | 20% |
| ₹20,00,001 – ₹24,00,000 | 25% |
| Above ₹24,00,000 | 30% |
A standard deduction of ₹75,000 applies for salaried employees and pensioners. The section 87A rebate brings net tax to NIL up to ₹12 lakh total income.
How do the old regime slabs compare?
The old regime preserves the legacy slabs unchanged:
| Income range | Tax rate |
|---|---|
| Up to ₹2,50,000 | NIL |
| ₹2,50,001 – ₹5,00,000 | 5% |
| ₹5,00,001 – ₹10,00,000 | 20% |
| Above ₹10,00,000 | 30% |
Section 87A rebate is also available under the old regime, capped at ₹12,500 (i.e. tax-free up to ₹5 lakh). The big difference: old regime keeps every deduction; new regime strips most of them away.
Which deductions are available only under the OLD regime?
- Section 80C: ₹1.5 lakh on PPF, ELSS, EPF, life insurance, home loan principal, tuition fees
- Section 80D: Up to ₹75,000 on health insurance premiums (self + family + parents senior citizens)
- Section 80CCD(1B): Additional ₹50,000 on NPS contribution
- Section 24(b): ₹2 lakh on home loan interest (self-occupied)
- HRA exemption: Based on actual rent paid + basic salary + city tier
- LTA exemption: Up to 2 trips in a 4-year block
- Section 80E, 80EEA, 80G, 80TTA, 80U: Education loan interest, additional home loan interest, donations, savings interest, disability
If you maximise ALL these deductions (~₹4-5 lakh combined), the old regime wins for incomes above ~₹15 lakh.
What's the actual cross-over point — old vs new?
The break-even depends on how many deductions you actually claim. Here are realistic scenarios for AY 2026-27:
| Gross income | Old regime tax (typical deductions) | New regime tax | Winner |
|---|---|---|---|
| ₹8 lakh | ₹0 (with ₹2.5L deductions) | ₹0 (rebate) | Tie |
| ₹12 lakh | ₹62,400 (with ₹2.5L deductions) | ₹0 (rebate) | NEW |
| ₹15 lakh | ₹1,32,600 (with ₹3.5L deductions) | ₹1,05,000 | NEW |
| ₹20 lakh | ₹2,80,800 (with ₹4L deductions) | ₹2,00,000 | NEW |
| ₹30 lakh | ₹5,84,400 (with ₹4.5L deductions) | ₹4,50,000 | NEW |
| ₹50 lakh | ₹12,18,000 (with ₹5L deductions) | ₹10,50,000 + surcharge | NEW |
For the vast majority of salaried Indians, the new regime now wins by ₹30,000 – ₹2 lakh annually. The old regime is mainly preferred by taxpayers with home loan interest deductions, large HRA exemptions (Tier 1 cities), and aggressive 80C investing.
How do I switch between regimes?
Salaried individuals (no business income) can switch every year — just pick the regime when filing your ITR. Business-income taxpayers can opt out only ONCE in a lifetime under section 115BAC(6); switching back is allowed but counts as your final switch. Form 10-IEA must be filed before the original ITR due date if you wish to opt OUT of the new regime as a business taxpayer.
Need help choosing?
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