Old vs new tax regime FY 2026-27: where the break even point is

All figures are in Indian rupees. FY 2026-27 runs from 1 April 2026 to 31 March 2027; the Income-tax Act 2025, in force from 1 April 2026, calls it tax year 2026-27 and drops the assessment year. The Union Budget of 1 February 2026 made no change to the slabs. The new Act did change the section numbers, so this page gives the 2025 Act number first and the old 1961 Act name in brackets, because the old name is still what most people search for. Only two of those pairings appear in an official text (section 22 for section 24, and section 263 for section 139); the 2025 numbers are the official ones.

New regime slabs for FY 2026-27

The new regime is the default under section 202 (115BAC). You opt out of it to use the old one.

On top of the slabs:

• Standard deduction for salary under section 19: 75,000.
• Rebate under section 156 (87A): up to 60,000 for a resident individual whose taxable income is 12,00,000 or less, so tax is zero up to that point. It does not reduce tax on special rate income such as capital gains.
• Marginal relief above 12,00,000: the tax before cess can never be more than the income above 12,00,000. The relief runs out at about 12,70,588 of taxable income.
• Health and education cess: 4% of the tax plus any surcharge.
• Surcharge from 50 lakh, capped at 25% in the new regime.

Why a 12.75 lakh salary pays zero

Gross salary 12,75,000, less the 75,000 standard deduction, gives taxable income of 12,00,000. Slab tax on that is 60,000 (5% of 4 lakh is 20,000, plus 10% of 4 lakh is 40,000). The rebate is also 60,000. Tax is zero.

Earn a little more and marginal relief stops the cliff. At 12,85,000 gross, taxable income is 12,10,000. Slab tax would be 61,500, but the income above 12,00,000 is only 10,000, so tax is capped at 10,000, plus 4% cess is 10,400. Without the relief a 10,000 raise would have cost 63,960 in tax. The cess itself has no marginal relief, so inside the relief zone each extra rupee of taxable income adds about 1.04 rupees of tax, and pay after tax dips by about 4 paise: 12,85,000 keeps 12,74,600 after tax, against 12,75,000 at a salary of 12,75,000.

Old regime slabs

The old regime keeps the lower exemption limits and the long list of deductions. Its rates come from the First Schedule of the Finance Act 2026.

For residents aged 60 to 79 the nil slab runs to 3,00,000, and for residents aged 80 and over to 5,00,000; a non resident of any age uses the under 60 table. The standard deduction is 50,000. The rebate is up to 12,500 when taxable income is 5,00,000 or less, with no marginal relief, so one rupee over that line costs about 13,000 in tax for someone under 60. Cess is 4% of tax plus surcharge. Surcharge runs up to 37% above 5 crore.

The old regime's deductions are the whole reason to compare. The common ones are section 123 (80C) up to 1,50,000 for PF, PPF, ELSS, life insurance and tuition fees, the HRA exemption for rent paid, section 126 (80D) for health insurance, and home loan interest on a self occupied home under section 22 (24(b)) up to 2,00,000.

Worked comparison at 15 lakh

Gross salary 15,00,000, no other income, under 60.

The new regime charges 1,13,100 less for this person, even after a full 80C claim. That is the usual result at this income. For pay quoted as a CTC, the India salary calculator first takes off the employer's EPF and other costs to reach the gross salary, then runs the same comparison.

The break even table

The question is how much you need to claim under the old regime before its tax is lower than the new one. We ran the two regimes at three salaries and raised the old regime deductions (everything beyond the 50,000 standard deduction) until the tax matched.

Read the table as a test. Add up what you can claim under the old regime. If it is below the figure in the third column, the new regime charges less. If it is above, the old regime charges less, and the gap is roughly the extra deductions times the old regime slab rate, plus 4% cess.

Two notes. The HRA exemption can be the largest of these deductions, and it depends on rent paid, basic salary and city: under Rule 279 of the Income-tax Rules 2026 it is the least of the HRA received, rent paid less 10% of basic plus DA, and 50% of basic plus DA in Mumbai, Kolkata, Delhi, Chennai, Hyderabad, Pune, Ahmedabad or Bengaluru (40% anywhere else). The income tax calculator works it out from the rent, the HRA received and the city under More options. And the employer's NPS contribution is deductible under section 124 (80CCD(2)) in both regimes, but not equally: the new regime allows up to 14% of basic plus DA for every employer, while the old regime allows 14% only for a Central or State Government employer and 10% for any other. For a private sector employee the NPS deduction is therefore larger in the new regime.

What the new Act changed

The Income-tax Act 2025 replaced the 1961 Act from 1 April 2026. The rates did not change with it. The section numbers did: the new regime is section 202, the rebate section 156, the 80C basket section 123 and health insurance section 126. If a page or a payroll team quotes "87A" or "80C", it means the same rule under its old name. The calculators show the 2025 number with the old name in brackets.

What this guide leaves out

It is a guide to the two rate tables with worked examples. It is not tax advice. It leaves out capital gains, business income, agricultural income, and the working of the surcharge above 50 lakh, though the calculator applies the surcharge. Income of those kinds needs the full computation in the return.

Compare both regimes on your salary with the India income tax calculator

Old and new regime questions

Which regime charges less tax on a 12 lakh salary in FY 2026-27? The new regime. After the 75,000 standard deduction the taxable income is 11,25,000, and the rebate makes the tax zero. The old regime would charge tax on the same salary unless deductions are very large.

Can I switch between regimes every year? A salaried person with no business income can opt out of the new regime, or return to it, each year when filing the return of income under section 263 (139).

Is the 75,000 standard deduction available in the old regime? No. The old regime standard deduction is 50,000. The 75,000 figure applies to the new regime only.

Sources

• The Income-tax Act, 2025, Gazette of India, 21 August 2025: section 202 new regime, section 156 rebate, section 19 standard deduction, sections 22, 123, 124 and 126, section 1(3) commencement on 1 April 2026 (read from an Internet Archive capture of the official file) checked 2 November 2026
• The Finance Act, 2026 (No. 4 of 2026): old regime slabs, surcharge and the 4% Health and Education Cess on tax plus surcharge (read from an Internet Archive capture of the official file) checked 2 November 2026
• Memorandum explaining the provisions in the Finance Bill, 2026: no change in tax rates checked 2 November 2026
• Income-tax Rules, 2026, Rule 279: HRA exemption and the eight cities at 50% (read from an Internet Archive capture of the official file) checked 2 November 2026