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Old vs New Tax Regime – Which Is Better? (AY 2026–27)

Compare old and new income tax regimes in India based on tax slabs, deductions, rebates, and take-home salary.

  • New tax regime is the default regime
  • Zero tax up to ₹12.75 lakh taxable income under new regime
  • Old regime is better for those with high deductions

Income Tax Slab Comparison

IncomeNew RegimeOld Regime
Up to ₹2.5LNilNil
₹2.5L – ₹4LNil5%
₹4L – ₹5L5%5%
₹5L – ₹8L5%20%
₹8L – ₹10L10%20%
₹10L – ₹12L10%30%
₹12L – ₹16L15%30%
₹16L – ₹20L20%30%
₹20L – ₹24L25%30%
Above ₹24L30%30%

Note: Health & education cess of 4% applies to both regimes.

Which Tax Regime Should You Choose?

Choose New Regime if

  • Your taxable income is up to ₹12.75 lakh
  • You don’t claim HRA or 80C
  • You want higher take-home pay
  • You prefer simple tax filing

Choose Old Regime if

  • You claim HRA
  • You invest heavily in 80C, 80D
  • You have a home loan
  • Your deductions exceed ₹3–4 lakh

Confused which tax regime is better for you?

Use our Salary Take Home Calculator to instantly compare both regimes.

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Frequently Asked Questions

Which tax regime is better in India for AY 2026–27?

The new tax regime is better for most salaried individuals earning up to ₹12.75 lakh due to higher rebate and standard deduction. The old regime is suitable for those claiming high deductions.

Is the new tax regime mandatory?

No. While the new regime is the default, taxpayers can opt for the old regime while filing their income tax return.

Can I switch between old and new tax regimes?

Yes, salaried individuals can switch every year. Business income taxpayers have limited switching options.

Does the new tax regime allow Section 80C deductions?

No. The new tax regime does not allow deductions like 80C, HRA, or home loan interest.

Which tax regime gives higher take-home salary?

The new regime generally gives higher take-home salary when deductions are minimal. The old regime benefits those with large tax-saving investments.