24 March 2026 · 49Tax
Old Tax Regime vs New Tax Regime: Which Saves More in 2026?
A detailed comparison of India's old and new tax regimes for AY 2026-27. Includes tax slabs, deduction limits, and examples to help you pick the right one.
The Big Question
Every salaried individual in India faces this question at filing time: should I go with the old tax regime or the new one? The answer depends on how much you claim in deductions. Let us break it down.
Tax Slabs: Old vs New (AY 2026-27)
New Tax Regime (Default)
| Income Slab | Tax Rate |
|---|---|
| Up to Rs 4,00,000 | Nil |
| Rs 4,00,001 – Rs 8,00,000 | 5% |
| Rs 8,00,001 – Rs 12,00,000 | 10% |
| Rs 12,00,001 – Rs 16,00,000 | 15% |
| Rs 16,00,001 – Rs 20,00,000 | 20% |
| Rs 20,00,001 – Rs 24,00,000 | 25% |
| Above Rs 24,00,000 | 30% |
Standard deduction of Rs 75,000 is allowed under the new regime. No other Chapter VI-A deductions are available (except employer NPS under 80CCD(2)).
Old Tax Regime
| Income Slab | Tax Rate |
|---|---|
| Up to Rs 2,50,000 | Nil |
| Rs 2,50,001 – Rs 5,00,000 | 5% |
| Rs 5,00,001 – Rs 10,00,000 | 20% |
| Above Rs 10,00,000 | 30% |
Standard deduction of Rs 50,000. All Chapter VI-A deductions are available (80C, 80D, 80CCD1B, 80E, 80TTA, HRA, etc.).
When Is the Old Regime Better?
The old regime saves more when your total deductions and exemptions exceed roughly Rs 3.75 lakh. Here is a typical breakup:
| Deduction | Amount |
|---|---|
| Section 80C (EPF + PPF + ELSS) | Rs 1,50,000 |
| Section 80D (health insurance) | Rs 25,000 |
| Section 80CCD(1B) (NPS) | Rs 50,000 |
| HRA exemption | Rs 1,50,000 |
| Total | Rs 3,75,000 |
If your deductions add up to this or more, the old regime likely wins. If they are significantly lower — say under Rs 2 lakh — the new regime's lower slab rates will save you more.
The exact crossover point depends on your income level. Use 49Tax's automatic regime comparison to see exact numbers for your situation.
Example: Rs 12 Lakh Salary
New Regime
- Gross salary: Rs 12,00,000
- Standard deduction: Rs 75,000
- Taxable income: Rs 11,25,000
- Tax: Rs 0 + Rs 20,000 + Rs 32,500 = Rs 52,500
- Add cess 4%: Rs 54,600
Old Regime (with Rs 3 lakh deductions)
- Gross salary: Rs 12,00,000
- Standard deduction: Rs 50,000
- Chapter VI-A deductions: Rs 3,00,000
- Taxable income: Rs 8,50,000
- Tax: Rs 0 + Rs 12,500 + Rs 70,000 = Rs 82,500
- Add cess 4%: Rs 85,800
In this case, the new regime saves Rs 31,200.
Old Regime (with Rs 4.5 lakh deductions including HRA)
- Gross salary: Rs 12,00,000
- Standard deduction: Rs 50,000
- Chapter VI-A + HRA: Rs 4,50,000
- Taxable income: Rs 7,00,000
- Tax: Rs 0 + Rs 12,500 + Rs 40,000 = Rs 52,500
- Add cess 4%: Rs 54,600
Now both regimes are nearly equal. With higher deductions, old regime starts winning.
Key Differences at a Glance
| Feature | Old Regime | New Regime |
|---|---|---|
| Default? | No (must opt in) | Yes |
| Section 80C | Up to Rs 1.5 lakh | Not available |
| Section 80D | Up to Rs 75,000 | Not available |
| HRA exemption | Available | Not available |
| NPS 80CCD(1B) | Rs 50,000 | Not available |
| Standard deduction | Rs 50,000 | Rs 75,000 |
| Tax slabs | Higher rates, fewer slabs | Lower rates, more slabs |
| Best for | High deduction claimers | Low/no deduction filers |
How to Choose
- Add up all your deductions — 80C, 80D, 80CCD1B, HRA, home loan interest, etc.
- If total deductions exceed Rs 3.75 lakh — old regime is likely better
- If total deductions are under Rs 2 lakh — new regime almost certainly wins
- In between? — compute both. Or let 49Tax do it for you.
Let 49Tax Calculate It for You
When you file through 49Tax, the tool computes your exact tax under both regimes side by side. No guesswork, no spreadsheet needed.