Old vs New Tax Regime India FY 2026-27
Quick Summary
The Old Tax Regime has higher slab rates (5%/20%/30%) but allows deductions under 80C, HRA, 80D, and home loan interest. The New Regime (default from FY 2024-25) has lower rates (5%/10%/15%/20%/30%) with no deductions except ₹75,000 standard deduction, and provides zero tax for income up to ₹7 lakh via Section 87A rebate.
The Break-Even Deduction Amount
The new regime is better if your total deductions (80C + HRA + 80D + home loan interest, beyond the standard deduction) are less than approximately ₹3.75 lakh. Above ₹3.75 lakh in deductions, the old regime typically saves more. This break-even point varies with income — use ToolsDock's Income Tax Calculator to find the exact answer for your income.
Who Should Choose the New Regime
The new regime is almost always better if: you are a fresh graduate or early-career professional not yet investing heavily in 80C instruments; you do not pay rent (no HRA); you do not have a home loan; your income is under ₹7.75 lakh (effectively zero tax after standard deduction + 87A rebate); or you prefer simplicity without tracking deductions.
Who Should Choose the Old Regime
The old regime remains beneficial if: you max out 80C (₹1.5L in PPF, ELSS, or LIC) + pay rent (HRA) + pay medical insurance (80D) + have a home loan with interest deduction. If these combined deductions exceed ₹3.75 lakh, the old regime's higher rates are offset by the deduction benefit.