The three differences that matter
| Feature | New regime | Old regime |
|---|---|---|
| Slab rates | 0/5/10/15/20/25/30% from ₹4 to ₹24 lakh | 0/5/20/30% from ₹2.5 to ₹10 lakh |
| Nil band widens with age | No | ₹3 lakh at 60; ₹5 lakh at 80 |
| Standard deduction | ₹75,000 | ₹50,000 |
| HRA exemption | No | Yes, section 10(13A) least-of-three |
| Section 80C / 80CCD(1B) | No | ₹1,50,000 / ₹50,000 |
| Section 80D health insurance | No | ₹25,000 self; ₹25,000–50,000 parents |
| Employer NPS, section 80CCD(2) | 14% of basic+DA | 10% of basic+DA |
| Home-loan interest (self-occupied) | No | Up to ₹2,00,000 |
| Section 87A rebate | ₹60,000 up to ₹12,00,000 total income | ₹12,500 up to ₹5,00,000 |
| Surcharge above ₹5 crore | 25% (capped) | 37% |
Three worked profiles, FY 2026-27
| Profile | New regime | Old regime |
|---|---|---|
| ₹15,00,000 gross salary, no deductions | ₹97,500 | ₹2,57,400 |
| ₹25,00,000 gross: HRA, home-loan, 80C, 80CCD(1B)+(2), 80D, 80E | ₹2,84,700 | ₹3,21,360 |
| Senior citizen: ₹12,00,000 pension + ₹1,50,000 interest; 80C, 80D | ₹74,100 | ₹1,37,800 |
The first profile is why most salaried taxpayers end up on the new regime: with no deductions the new regime is never more expensive, and the slab rates are simply kinder. The second is the counter-example — a full old-regime book of deductions, including employer NPS and education-loan interest, can move the old regime into contention. The third is what age does: exemption limits, 80TTB and the higher 80D caps all favour the old regime, though often not enough.
The break-even deduction
Instead of asking which regime is better in the abstract, ask a solvable question: how much more deduction would the old regime need before it stopped losing? The calculator answers it numerically for your inputs and prints it next to the recommendation. If the break-even amount is larger than what the capped sections can still absorb, the tool says the old regime cannot catch up rather than showing an impossible number.
Next step: calculate your tax for FY 2026-27 and read the break-even line under the comparison.
How to decide, practically
- List what you already claim: provident fund is real 80C money for most salaried employees whether or not they planned it.
- Add employer NPS — it is the only Chapter VI-A cap that also helps the new regime, with different percentages per regime.
- Price HRA honestly with the least-of-three formula; the exempt share is often smaller than the HRA received.
- Let the comparison be arithmetic, not loyalty: run both totals in the calculator before choosing.
Frequently asked questions
Is the new regime always cheaper?
No. The new regime wins whenever the old regime's deductions and exemptions do not add up to more than the slab-rate advantage. With no deductions the new regime is never more expensive — but ₹1,50,000 of 80C, ₹50,000 of NPS, ₹25,000 of 80D, a home-loan interest claim and a working HRA exemption can flip the answer.
What is the break-even deduction?
The additional Chapter VI-A deduction that, if claimed under the old regime, would make its tax equal to the new regime's. The calculator solves for it numerically, reports the break-even rupee amount, and says plainly when no allowed amount can close the gap.
Can I switch regimes?
Salaried taxpayers without business income choose a regime every year when they file. Taxpayers with business income have tighter chances to revert, so confirm the current rules before planning around a switch.
Which deductions survive in the new regime?
The ₹75,000 standard deduction, employer NPS under section 80CCD(2) at 14% of basic+DA, and certain transport and interest allowances notified by the government. HRA, 80C, 80D, 80E, 80G and 80TTB do not.