The right answer depends on your income and how much you invest. Here's a complete breakdown — with worked examples — so you can decide in minutes.
Enter your income and deductions. PlanMyTax instantly shows you both regimes and recommends the better one.
Calculate new vs old regime free →The Finance Act 2026 carried forward the same income tax slabs as FY 2025-26. The key headline remains: under the new regime, income up to ₹12 lakh is effectively tax-free (after the Section 87A rebate), making it the default choice for most salaried individuals with limited deductions.
The standard deduction under the new regime was also raised to ₹75,000 — so the effective zero-tax threshold is ₹12,75,000 for salaried employees.
| Income slab | 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% |
Rebate u/s 87A: Total tax computed above is fully rebated (zero tax) if total income does not exceed ₹12,00,000. With the ₹75,000 standard deduction for salaried employees, gross salary up to ₹12,75,000 is tax-free under the new regime.
| Income slab (below 60) | 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% |
Under the old regime, the tax computed is rebated to zero if total taxable income does not exceed ₹5,00,000 (u/s 87A). The standard deduction is ₹50,000 for salaried employees.
This is the critical difference. The old regime allows you to claim:
The new regime does not allow any of these (except the employer NPS contribution under 80CCD(2), which is allowed in both).
| Feature | New Regime | Old Regime |
|---|---|---|
| Standard deduction (salaried) | ₹75,000 | ₹50,000 |
| Basic exemption limit | ₹4,00,000 | ₹2,50,000 |
| Rebate 87A (zero-tax up to) | ₹12,00,000 | ₹5,00,000 |
| Section 80C (up to ₹1.5L) | ✗ | ✓ |
| Section 80D (health insurance) | ✗ | ✓ |
| HRA exemption | ✗ | ✓ |
| Home loan interest (24b) | ✗ | ✓ |
| NPS 80CCD(1B) extra ₹50K | ✗ | ✓ |
| Employer NPS 80CCD(2) | ✓ | ✓ |
| Default for salaried (no submission) | ✓ | ✗ |
Let's say Priya earns ₹15,00,000 per year. She pays ₹15,000/month in HRA-eligible rent, contributes ₹1,50,000 in ELSS (80C), and pays ₹20,000 annual health insurance premium.
Taxable income = ₹15,00,000 − ₹75,000 (standard deduction) = ₹14,25,000
| Slab | Amount | Tax |
|---|---|---|
| Up to ₹4L | ₹4,00,000 | Nil |
| ₹4L – ₹8L @ 5% | ₹4,00,000 | ₹20,000 |
| ₹8L – ₹12L @ 10% | ₹4,00,000 | ₹40,000 |
| ₹12L – ₹14.25L @ 15% | ₹2,25,000 | ₹33,750 |
| Tax before cess | ₹93,750 | |
| Health & Education Cess (4%) | ₹3,750 | |
| Total tax | ₹97,500 |
Deductions: Standard ₹50,000 + 80C ₹1,50,000 + 80D ₹20,000 + HRA ~₹90,000 (estimated) = ₹3,10,000
Taxable income = ₹15,00,000 − ₹3,10,000 = ₹11,90,000
| Slab | Amount | Tax |
|---|---|---|
| Up to ₹2.5L | ₹2,50,000 | Nil |
| ₹2.5L – ₹5L @ 5% | ₹2,50,000 | ₹12,500 |
| ₹5L – ₹10L @ 20% | ₹5,00,000 | ₹1,00,000 |
| ₹10L – ₹11.9L @ 30% | ₹1,90,000 | ₹57,000 |
| Tax before cess | ₹1,69,500 | |
| Health & Education Cess (4%) | ₹6,780 | |
| Total tax | ₹1,76,280 |
The numbers above are illustrative. Your exact tax depends on your specific salary structure, HRA city type (metro vs non-metro), employer NPS contribution, and capital gains. The easiest way to get an accurate answer:
PlanMyTax computes new and old regime in parallel, shows you which saves more, and gives specific suggestions on where you can invest to reduce your tax further.
Start calculating — it's free →Salaried employees can switch between the new and old regime every year when filing their ITR. However, if you have business income, switching to the old regime is a one-time choice (you can switch back to new once, but not again).
Yes. From FY 2024-25 onwards, the new regime is the default. If you want to opt for the old regime, you must declare this to your employer (via Form 10IEA) or at the time of filing your ITR.
Employer contributions to NPS under Section 80CCD(2) are allowed as a deduction under both regimes — up to 10% of salary (14% for central government employees). This is one deduction you don't lose by switching to the new regime.
The Finance Act 2026 did not introduce major new deductions. The major structural change (new regime slabs and rebate) was introduced in FY 2023-24 and carried forward since. The HRA metro city list was expanded to include Bengaluru, Hyderabad, Pune, and Ahmedabad.
This article is for informational purposes and reflects tax rules as published by the CBDT for FY 2026-27. For personalised tax advice, consult a Chartered Accountant. PlanMyTax calculations are based on official Finance Act notifications and IRS Revenue Procedures.