Old vs new tax regime for FY 2026-27

What you are actually choosing

The new regime is the default. In the Income-tax Act, 2025 it is section 202. Before 1 April 2026 the same choice was section 115BAC. The Finance Bill 2026 memorandum says the slab rates are unchanged for tax year 2026-27.

Section 202 gives a wider nil band and lower rates in the middle. It takes away most of the old deductions. House rent allowance, section 123 (this was 80C), section 126 (this was 80D), the extra NPS under section 124(3), professional tax, and interest on a self-occupied house all drop out.

Two things survive in both regimes. A salaried person gets a standard deduction: ₹75,000 in the new regime and ₹50,000 in the old one. Employer NPS under section 124 can still be deducted, within 14% of basic pay plus dearness allowance in the new regime, or 14% for a government employer and 10% for a private employer in the old regime.

If you have no business income, you choose the regime when you file the return for that year. The old vs new calculator compares the two bills from the numbers you type. The Excel workbook uses the same formulas.

The tax with no extra deductions

The table below is a salaried resident under 60. The only deduction is the standard deduction. Tax includes the section 156 rebate, marginal relief where it applies, and 4% cess. Surcharge does not start until income is above ₹50 lakh, so it is not in this range.

“New tax” and “Old tax” are the full bill. “Extra deductions to break even” is the old-regime amount, on top of the ₹50,000 standard deduction, that makes the old bill the same or lower. It is the same search the calculator runs.

Table: Salary, tax with only the standard deduction, and the extra old-regime deduction that matches the new regime

Read the last column as a hurdle, not as advice to buy a product. If your real deductions are below it, the new regime costs less. If they are at or above it, the old regime costs the same or less.

Why the hurdle jumps around ₹12.75 lakh

A salary of ₹12,75,000 becomes taxable income of ₹12,00,000 after the ₹75,000 standard deduction. That is the ₹12 lakh line. The section 156 rebate wipes the slab tax. The new-regime bill is ₹0.

One step higher, a salary of ₹13,00,000 has taxable income of ₹12,25,000. Slab tax is ₹63,750. Marginal relief cuts that so the tax before cess is only the ₹25,000 of income above ₹12 lakh. Cess is ₹1,000. The bill is ₹26,000.

The old regime, with nothing but the ₹50,000 standard deduction, still charges ₹1,95,000 on that ₹13 lakh salary. The breakeven deduction falls a little once the new bill is no longer zero, because the old bill only has to get down to ₹26,000, not to zero. The slabs guide walks through the rebate in more detail.

What can fill the last column

The capped pieces, in the old regime only, are:

• Section 123, which was 80C, up to ₹1,50,000. PPF, EPF, ELSS, life insurance and the principal of a home loan share this one cap.
• Section 126, which was 80D. The calculator uses one combined ceiling of ₹1,00,000. It does not split the self and parent limits.
• Section 124(3), which was 80CCD(1B), up to ₹50,000 of your own NPS.
• Section 22(1)(b), which was 24(b), up to ₹2,00,000 of interest on a self-occupied house.

Those four caps add up to ₹5,00,000. From a salary of ₹12 lakh upwards in the table, the breakeven is higher than ₹5 lakh. The gap has to come from house rent allowance or from some other old-regime deduction the return actually allows. HRA is not a fixed cap. It is the least of three amounts, and only if you pay rent. The HRA guide shows the sum.

At ₹7 lakh, ₹8 lakh or ₹10 lakh, the hurdle is ₹1.5 lakh, ₹2.5 lakh or ₹4.5 lakh. Section 123 alone, or section 123 plus a health-insurance premium, can clear the lower ones. You do not need a home loan for the old regime to win at those salaries, if the deductions are real.

A salary of ₹18 lakh with a normal set of claims

Take ₹18,00,000 of salary. Section 123 at the cap, ₹1,50,000. Section 126 of ₹25,000. Extra NPS of ₹50,000. HRA exemption of ₹1,20,000. No home-loan interest.

The new-regime bill is still ₹1,50,800, because none of those claims exist under section 202. The old-regime bill is ₹2,43,360. The new regime is cheaper by ₹92,560.

The table says this salary needs about ₹6,41,666 of extra deductions. The claims above are ₹3,45,000. That is short of the hurdle, which is why the old bill is still higher. A larger HRA exemption, or interest on a self-occupied house, is what would close it. Type your own figures in the calculator rather than stretching this example.

Employer NPS is not in the hurdle

Employer NPS is allowed in both regimes, so the breakeven search leaves it out. If your employer pays it, put the contribution and your basic pay plus dearness allowance into the calculator. The allowed amount can differ: 14% in the new regime, and 10% for a private employer in the old regime. A government employer stays at 14% in both.

Do not add the employer amount to the last column of the table. That would double count it.

Age, and income that is not salary

The table is under 60 and salaried. A resident aged 60 to 79 has a ₹3 lakh nil band in the old regime. A resident aged 80 or older has ₹5 lakh. The new regime does not change with age. A higher old nil band lowers the old bill, so the breakeven deduction is smaller than the table. Use the calculator and set the age.

A person who is not salaried does not get the standard deduction. The new regime then starts from the full income. On a ₹13 lakh professional receipt, the new bill is no longer ₹26,000. Run that case in the income tax calculator with “Not salaried”.

Cess is 4% after the rebate and after surcharge. There is no marginal relief on the cess itself. Surcharge, once income is above ₹50 lakh, can change the comparison. The Excel sheet includes it. This table stops at ₹30 lakh so the hurdle stays easy to read.

How to use the number

Write down the old-regime deductions you can actually support with the return. Leave out the standard deduction. Leave out employer NPS. Compare the total with the last column for your salary.

If you are between two rows, use the calculator. The table steps by ₹1 lakh. A salary of ₹16.4 lakh is not the ₹16 lakh row.

The Excel file is the same engine in cells. Change the inputs. Do not type over a formula. Column H on the breakeven sheet is a value from this search, because a loop is a poor fit for one spreadsheet formula. The tax columns next to it are live formulas.

This is a learning comparison for a resident individual. It is not a filed return, and it is not a reason to buy an investment you do not want. The section number guide is there when a notice or an older article still says 80C or 115BAC.