Which tax regime is better for FY 2026-27?

It depends on your deductions. The new regime is better if your total deductions (80C + 80D + HRA + home loan interest) are less than the break-even point for your income. For income up to ₹12L, the new regime is almost always better due to the ₹12L rebate. For income above ₹15L with high deductions, the old regime may save more.

Can I switch between old and new regime every year?

Salaried employees can switch between regimes every year at the time of filing ITR. However, if you have business income, you can switch only once from new to old regime. After switching back to old regime, you cannot switch to new regime again (except by closing the business).

What is the break-even deduction amount for old vs new regime?

The break-even depends on income. For ₹10L income: deductions above ₹2.5L favour old regime. For ₹15L income: deductions above ₹3.75L favour old regime. For ₹20L income: deductions above ₹4.25L favour old regime. Use the ITR calculator to find your exact break-even.

Is HRA available in the new tax regime?

No. HRA exemption under Section 10(13A) is not available in the new tax regime. If you pay high rent and claim significant HRA, the old regime may be better for you.

What deductions are available in the new tax regime?

The new regime allows: standard deduction (₹75,000 for salaried), employer NPS contribution under Section 80CCD(2), Agniveer Corpus Fund deduction under 80CCH, and family pension standard deduction. Most other deductions (80C, 80D, HRA, home loan interest) are not available.

Which tax regime is better for FY 2026-27?

It depends on your deductions. The new regime is better if your total deductions (80C + 80D + HRA + home loan interest) are less than the break-even point for your income. For income up to ₹12L, the new regime is almost always better due to the ₹12L rebate. For income above ₹15L with high deductions, the old regime may save more.

Can I switch between old and new regime every year?

Salaried employees can switch between regimes every year at the time of filing ITR. However, if you have business income, you can switch only once from new to old regime. After switching back to old regime, you cannot switch to new regime again (except by closing the business).

What is the break-even deduction amount for old vs new regime?

The break-even depends on income. For ₹10L income: deductions above ₹2.5L favour old regime. For ₹15L income: deductions above ₹3.75L favour old regime. For ₹20L income: deductions above ₹4.25L favour old regime. Use the ITR calculator to find your exact break-even.

Is HRA available in the new tax regime?

No. HRA exemption under Section 10(13A) is not available in the new tax regime. If you pay high rent and claim significant HRA, the old regime may be better for you.

What deductions are available in the new tax regime?

The new regime allows: standard deduction (₹75,000 for salaried), employer NPS contribution under Section 80CCD(2), Agniveer Corpus Fund deduction under 80CCH, and family pension standard deduction. Most other deductions (80C, 80D, HRA, home loan interest) are not available.

FY 2026-27 · AY 2027-28

Old vs New Tax Regime — Which Saves More?

Budget 2026 kept both regimes unchanged. The new regime is the default with a ₹12L effective tax-free limit. The old regime is better only if your total deductions exceed the break-even point for your income level.

Budget 2026 Update

No changes to tax slabs for FY 2026-27. Both regimes continue with the same rates as FY 2025-26.

Calculate Your Tax →

New Regime — Better When

✓Income up to ₹12L (effectively zero tax via 87A rebate)
✓Total deductions below break-even for your income
✓No HRA or home loan interest to claim
✓You prefer simplicity over tax planning
✓Income above ₹15L with low deductions

Old Regime — Better When

✓High HRA — paying rent in a metro city
✓Home loan with ₹2L+ annual interest deduction
✓Full 80C utilisation (₹1.5L in ELSS, PPF, LIC etc.)
✓80D health insurance premiums for family
✓Total deductions exceed the break-even threshold

Tax Comparison — Real Examples FY 2026-27

All figures include 4% Health & Education Cess. Standard deduction: ₹75,000 (new) / ₹50,000 (old).

Scenario	New Regime	Old Regime	Better
₹8L salary, ₹1.5L deductions (80C only)	₹0	₹33,800	New
₹12L salary, ₹1.5L deductions	₹0	₹1.17L	New
₹12L salary, ₹3.5L deductions (80C + 80D + HRA)	₹0	₹75,400	New
₹15L salary, ₹1.5L deductions	₹97,500	₹2.11L	New
₹15L salary, ₹3.75L deductions	₹97,500	₹1.40L	New
₹20L salary, ₹1.5L deductions	₹1.92L	₹3.67L	New
₹20L salary, ₹4.25L deductions	₹1.92L	₹2.81L	New

* Indicative. Surcharge not included. Actual tax may vary based on specific deduction eligibility.

Key Differences — FY 2026-27

Feature	New Regime	Old Regime
Default regime	Yes — automatic	Must opt in at filing
Basic exemption limit	₹4,00,000	₹2,50,000
Standard deduction	₹75,000	₹50,000
Section 87A rebate	Up to ₹12L taxable income	Up to ₹5L taxable income
Section 80C (₹1.5L)	Not available	Available
Section 80D (health insurance)	Not available	Up to ₹25K–₹50K
HRA exemption	Not available	Available
Home loan interest (Sec 24b)	Not available	Up to ₹2L
NPS 80CCD(2) — employer	Available	Available
Leave travel allowance	Not available	Available
Switching (salaried)	Every year at ITR filing	Every year at ITR filing

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Scenario

New Regime

Old Regime

Better

₹8L salary, ₹1.5L deductions (80C only)

₹0

₹33,800

New

₹12L salary, ₹1.5L deductions

₹0

₹1.17L

New

₹12L salary, ₹3.5L deductions (80C + 80D + HRA)

₹0

₹75,400

New

₹15L salary, ₹1.5L deductions

₹97,500

₹2.11L

New

₹15L salary, ₹3.75L deductions

₹97,500

₹1.40L

New

₹20L salary, ₹1.5L deductions

₹1.92L

₹3.67L

New

₹20L salary, ₹4.25L deductions

₹1.92L

₹2.81L

New

Feature

New Regime

Old Regime

Default regime

Yes — automatic

Must opt in at filing

Basic exemption limit

₹4,00,000

₹2,50,000

Standard deduction

₹75,000

₹50,000

Section 87A rebate

Up to ₹12L taxable income

Up to ₹5L taxable income

Section 80C (₹1.5L)

Not available

Available

Section 80D (health insurance)

Not available

Up to ₹25K–₹50K

HRA exemption

Not available

Available

Home loan interest (Sec 24b)

Not available

Up to ₹2L

NPS 80CCD(2) — employer

Available

Leave travel allowance

Not available

Available

Switching (salaried)

Every year at ITR filing