Old vs New Tax Regime — Which is Better in 2026?
Side-by-side comparison with real examples for ₹7L, ₹10L, ₹15L & ₹20L salaries.
Quick Summary
- New regime — lower slab rates, simpler, almost no deductions (only standard deduction, employer NPS, family pension).
- Old regime — higher rates, but allows 80C, 80D, HRA, home loan interest, LTA, 80E etc.
- Rule of thumb: If your combined deductions (80C + 80D + HRA + home loan + NPS) exceed roughly ₹3.75 lakh, old regime usually wins — otherwise new regime is better.
Direct Comparison — Tax at Different Salaries (FY 2026-27)
| Gross Salary | New Regime Tax* (Budget 2025) | Old Regime Tax (typical deductions)** | Better Regime |
|---|---|---|---|
| ₹7,50,000 | ₹0 | ₹0 | Tie |
| ₹10,00,000 | ₹0 | ₹49,400 | New |
| ₹12,00,000 | ₹0 | ₹78,000 | New |
| ₹12,75,000 | ₹0 | ₹93,600 | New |
| ₹15,00,000 | ₹97,500 | ₹1,35,200 | New |
| ₹20,00,000 | ₹1,92,400 | ₹2,18,400 | New (marginal) |
| ₹25,00,000 | ₹3,11,400 | ₹3,11,000 | Tie / depends on deductions |
* New regime (Budget 2025, FY 2025-26): ₹75,000 standard deduction + Section 87A rebate up to ₹60,000 (if taxable ≤ ₹12 lakh) + 4% cess. Marginal relief applied just above ₹12L. ** Old regime assumes ₹1.5L 80C + ₹25K 80D + scaled HRA + ₹50K SD + 4% cess. Real outcomes vary with your exact deductions — verify with our calculator.
Who Should Pick the Old Regime?
- You pay home-loan EMI (Section 24b interest up to ₹2 lakh).
- You have big HRA (metro rent).
- You max out 80C + 80CCD(1B) NPS (₹1.5L + ₹50K).
- Your employer provides food coupons, LTA, leave encashment etc.
Who Should Pick the New Regime?
- Salary up to ₹12 lakh with minimal deductions.
- First-job freshers (no 80C yet).
- Business owners with few eligible expenses.
- Senior citizens without home loan / rent.
Don't Guess — Calculate
Open our free Old vs New Tax Regime Calculator and put in your real numbers.
Frequently Asked Questions
Is old tax regime better for home-loan borrowers?
Usually yes — Section 24(b) deduction of up to ₹2 lakh interest is allowed only in old regime, which often tips the balance. Run both regimes through our calculator.
Can I switch between regimes every year?
Salaried employees with no business income can switch every financial year. Individuals with business income can opt out of new regime only once.
Is NPS available in new tax regime?
Yes — employer's NPS contribution up to 14% of basic + DA is deductible under Section 80CCD(2) in both regimes. Self-contribution 80CCD(1B) ₹50,000 is old-regime only.
Why is my old regime tax higher than new regime even with deductions?
Because Budget 2025 lifted the new-regime Section 87A rebate to ₹60,000 (zero tax up to ₹12 lakh taxable income / ₹12.75 lakh CTC) and revised slabs are flatter. Unless your old-regime deductions are very large (home-loan interest + maxed 80C + HRA), the new regime usually wins for middle incomes.