The short answer
Since Budget 2025, the new regime has lower rates and a much bigger rebate. If your total deductions under the old regime, beyond the standard deduction, are less than about ₹5.5 lakh at a ₹15 lakh salary or about ₹7 lakh at ₹20 lakh, the new regime costs you less. Most people don’t claim that much, so the new regime usually wins.
The quickest way to know for sure is to enter your salary and deductions in the income tax calculator: it works out both regimes side by side and picks the lower one.
New regime slabs (Tax Year 2026-27)
| Taxable income | Rate |
|---|---|
| Up to ₹4 lakh | Nil |
| ₹4–8 lakh | 5% |
| ₹8–12 lakh | 10% |
| ₹12–16 lakh | 15% |
| ₹16–20 lakh | 20% |
| ₹20–24 lakh | 25% |
| Above ₹24 lakh | 30% |
Salaried people get a ₹75,000 standard deduction, and the section 87A rebate makes the tax nil when taxable income is up to ₹12 lakh. So a salary of up to ₹12.75 lakh pays no income tax at all.
Old regime slabs
| Taxable income (below 60) | Rate |
|---|---|
| Up to ₹2.5 lakh | Nil |
| ₹2.5–5 lakh | 5% |
| ₹5–10 lakh | 20% |
| Above ₹10 lakh | 30% |
The old regime gives a ₹50,000 standard deduction and a rebate only up to ₹5 lakh of taxable income, but it allows many deductions: section 80C (up to ₹1.5 lakh), 80D health insurance, HRA exemption, home loan interest on a self-occupied house (up to ₹2 lakh), and an extra ₹50,000 for your own NPS under 80CCD(1B).
A 4% health and education cess applies to the tax in both regimes.
Worked examples (Tax Year 2026-27, age below 60)
| Salary | Deductions claimed (old regime) | New regime tax | Old regime tax |
|---|---|---|---|
| ₹10 lakh | 80C ₹1.5 lakh + 80D ₹25,000 | Nil | ₹70,200 |
| ₹15 lakh | 80C ₹1.5 lakh + 80D ₹25,000 | ₹97,500 | ₹2,02,800 |
| ₹15 lakh | Above + HRA ₹2.4 lakh + NPS ₹50,000 | ₹97,500 | ₹1,13,880 |
| ₹20 lakh | 80C + 80D ₹50,000 + home loan ₹2 lakh + NPS | ₹1,92,400 | ₹2,73,000 |
Even with HRA, a home loan and NPS, the new regime is cheaper in these cases. The old regime only wins once deductions pass the break-even point.
Break-even: how much you need to claim
Roughly, the old regime starts to save tax when your deductions (other than the ₹50,000 standard deduction) exceed:
| Salary | Deductions needed |
|---|---|
| ₹15 lakh | about ₹5.45 lakh |
| ₹20 lakh | about ₹7.1 lakh |
| ₹25 lakh | about ₹8 lakh |
Add up your HRA exemption (check it with the HRA calculator), 80C, 80D, home loan interest and NPS. If the total is below these figures, choose the new regime.
Who should still consider the old regime
- People paying high rent in a big city, with a large HRA exemption.
- Home owners paying close to ₹2 lakh a year in home loan interest.
- Those who already invest the full ₹1.5 lakh under 80C, pay health insurance for parents, and contribute to NPS.
Often it takes all of these together to beat the new regime.
What it means for your monthly salary
Your employer deducts TDS based on the regime you declare at the start of the year. Choosing the right one means more money in hand every month, not just a refund later. See your take-home pay under each regime with the salary after tax calculator, or start from your offer letter with the CTC to in-hand calculator.
The rules here were checked in October 2026. Tax rules change with each Budget, and your situation may include income these examples don’t cover; for filing, rely on the income tax portal or a chartered accountant.