Old Regime vs New Regime FY 2026-27: The Breakeven Calculator and Who Should Switch

The real question is not whether the old regime or the new regime is "better" in the abstract. It is whether one regime is better for your income, your deductions, and your filing profile for FY 2026-27. The answer changes depending on salary, rent, home-loan interest, medical insurance, and NPS contributions. This guide gives you the exact comparison: the FY 2026-27 slab structure, the deduction stack that can still make the old regime worthwhile, and the three profiles where the old regime can still win. If you want to run your own numbers, use the free calculator at /tools/old-new-regime-breakeven.

What Changed in FY 2026-27

The biggest change is that the new regime now sits at the center of the system. Under Section 115BAC of the Income-tax Act, 1961, read with the concordance to Section 202 of the Income-tax Act, 2025, the new regime is the default from FY 2024-25 onward. For FY 2026-27, the key features remain the same: higher slab thresholds, a larger standard deduction, and a much wider zero-tax band through Section 87A rebate.

That combination matters because it widens the new regime's advantage for middle-income salaried taxpayers. The old regime still survives, but only when the deduction stack is large enough to offset the new regime's lower rates and broader rebate.

The FY 2026-27 Slabs Side by Side

For salaried employees and pensioners, the standard deduction is ₹75,000 in the new regime and ₹50,000 in the old regime. Under Section 87A, the new regime gives zero tax when net taxable income is at or below ₹12,00,000, while the old regime gives zero tax when net taxable income is at or below ₹5,00,000.

What the New Regime Costs You

The new regime is attractive because of lower rates and a larger rebate band, but it comes with a trade-off: many of the deductions and exemptions that made the old regime valuable are not available.

You generally lose:

• Section 80C deductions, including PF, ELSS, PPF, life insurance premium, home-loan principal, and tuition fees, up to ₹1,50,000
• Section 80D health insurance deduction, up to ₹25,000 for self/family below 60, or ₹50,000 for senior citizens
• HRA exemption for rented accommodation
• Section 24(b) home-loan interest deduction of up to ₹2,00,000 for self-occupied property
• Section 80CCD(1B) additional NPS deduction of ₹50,000
• LTA
• Most allowances under Section 10

What remains available in the new regime:

• Standard deduction of ₹75,000 for salaried taxpayers and pensioners
• Section 80CCD(2) employer NPS contribution, up to 10% of basic salary
• Section 87A rebate up to the ₹12,00,000 taxable-income threshold

The Breakeven: How Much Deduction You Need

The break-even point is the level of deductions at which both regimes produce the same final tax. Below that point, the new regime is cheaper. Above it, the old regime can still win.

At ₹10,00,000 gross salary

Assume the taxpayer is salaried and below 60.

New regime:

• Gross salary: ₹10,00,000
• Less standard deduction: ₹75,000
• Taxable income: ₹9,25,000
• Tax calculation: ₹4,00,000 x 0% + ₹4,00,000 x 5% + ₹1,25,000 x 10%
• Tax before cess: ₹32,500
• Cess @ 4%: ₹1,300
• Total tax: ₹33,800

Old regime:

• Gross salary: ₹10,00,000
• Less standard deduction: ₹50,000
• Taxable income before other deductions: ₹9,50,000
• Tax calculation: ₹2,50,000 x 0% + ₹2,50,000 x 5% + ₹4,50,000 x 20%
• Tax before cess: ₹1,02,500
• Cess @ 4%: ₹4,100
• Total tax: ₹1,06,600

At this income level, the old regime needs roughly ₹3,25,000 of additional deductions beyond the standard deduction to match the new regime. In practical terms, that means a full 80C claim, home-loan interest, 80D, and often HRA as well.

At ₹15,00,000 gross salary

New regime:

• Gross salary: ₹15,00,000
• Less standard deduction: ₹75,000
• Taxable income: ₹14,25,000
• Tax calculation: ₹4,00,000 x 0% + ₹4,00,000 x 5% + ₹4,00,000 x 10% + ₹2,25,000 x 15%
• Tax before cess: ₹93,750
• Cess @ 4%: ₹3,750
• Total tax: ₹97,500

Old regime with a strong deduction stack:

• Standard deduction: ₹50,000
• 80C: ₹1,50,000
• 80D: ₹25,000
• Home-loan interest: ₹2,00,000
• NPS under Section 80CCD(1B): ₹50,000
• Total deductions: ₹4,75,000
• Taxable income: ₹10,25,000
• Tax calculation: ₹2,50,000 x 0% + ₹2,50,000 x 5% + ₹5,25,000 x 20%
• Tax before cess: ₹1,17,500
• Cess @ 4%: ₹4,700
• Total tax: ₹1,22,200

Even with major deductions maxed out, the old regime costs ₹24,700 more here. At ₹15 lakh salary, the new regime usually wins unless the taxpayer has an unusually large deduction base.

At ₹20,00,000 gross salary

New regime:

• Gross salary: ₹20,00,000
• Less standard deduction: ₹75,000
• Taxable income: ₹19,25,000
• Tax calculation: ₹4,00,000 x 0% + ₹4,00,000 x 5% + ₹4,00,000 x 10% + ₹4,00,000 x 15% + ₹3,25,000 x 20%
• Tax before cess: ₹1,85,000
• Cess @ 4%: ₹7,400
• Total tax: ₹1,92,400

Old regime with the same ₹4,75,000 deduction stack:

• Taxable income: ₹15,25,000
• Tax calculation: ₹2,50,000 x 0% + ₹2,50,000 x 5% + ₹5,00,000 x 20% + ₹5,25,000 x 30%
• Tax before cess: ₹2,70,000
• Cess @ 4%: ₹10,800
• Total tax: ₹2,80,800

At ₹20 lakh, the old regime costs ₹88,400 more even when the deduction stack is already substantial. The new regime is decisively better in this range for most salaried taxpayers.

Three Cases Where the Old Regime Still Wins

The old regime is not dead. It still wins in a narrow set of situations where deductions are genuinely large and provable.

Case 1: Home Loan Plus HRA

Consider a taxpayer earning ₹8,00,000 gross, paying rent of ₹20,000 per month, and paying home-loan interest of ₹2,00,000. Add a full Section 80C claim of ₹1,50,000 and Section 80D of ₹25,000.

Total deductions:

• Standard deduction: ₹50,000
• 80C: ₹1,50,000
• Home-loan interest: ₹2,00,000
• HRA exemption: about ₹1,40,000
• 80D: ₹25,000
• Total: ₹5,65,000

Old regime taxable income:

• ₹8,00,000 - ₹5,65,000 = ₹2,35,000
• Tax: nil

New regime taxable income:

• ₹8,00,000 - ₹75,000 = ₹7,25,000
• Tax: ₹4,00,000 x 0% + ₹3,25,000 x 5%
• Tax before cess: ₹16,250
• Cess @ 4%: ₹650
• Total tax: ₹16,900

In this profile, the old regime wins by ₹16,900.

Case 2: Senior Citizen with Large Medical Cover

Now take a senior citizen aged 65, with pension income of ₹9,00,000, no HRA, and no home loan. Suppose they claim ₹50,000 for self health insurance and ₹50,000 for senior citizen parents under Section 80D, plus ₹1,00,000 under Section 80C.

Old regime deductions:

• Standard deduction: ₹50,000
• 80C: ₹1,00,000
• 80D: ₹1,00,000
• Total deductions: ₹2,50,000

Old regime taxable income:

• ₹9,00,000 - ₹2,50,000 = ₹6,50,000
• Tax calculation: ₹3,00,000 x 0% + ₹2,00,000 x 5% + ₹1,50,000 x 20%
• Tax before cess: ₹40,000
• Cess @ 4%: ₹1,600
• Total tax: ₹41,600

New regime:

• ₹9,00,000 - ₹75,000 = ₹8,25,000 taxable
• Tax calculation: ₹4,00,000 x 0% + ₹4,00,000 x 5% + ₹25,000 x 10%
• Tax before cess: ₹22,500
• Cess @ 4%: ₹900
• Total tax: ₹23,400

In this case, the old regime still loses. The lesson is important: Section 80D alone is rarely enough to justify the old regime. Seniors usually need either a home loan or very large HRA-linked rent to make the old regime competitive.

Case 3: Business Income Taxpayer and the Last Chance to Switch Back

For assessees with business or professional income who had earlier opted out of the new regime, FY 2026-27 is the last year to revert from the new regime back to the old regime under Section 115BAC(6) of the Income-tax Act, 1961.

That makes this a one-shot decision. Once the deadline passes, the switching flexibility narrows further. If you have business income, compute both regimes carefully before the return filing deadline and before the year closes. This is one of the few cases where a CA's review is not optional.

The 80CCD(2) Bridge

One deduction many comparison articles forget is Section 80CCD(2), the employer NPS contribution. This deduction is available in the new regime too.

That means:

• If your employer contributes to NPS on your behalf, you can deduct up to 10% of basic salary
• This is one of the few meaningful deductions still available in the new regime
• It can materially reduce taxable income even where 80C, 80D, HRA, and Section 24(b) are not available

For salaried taxpayers with a payroll-friendly employer, this is a real planning lever. It does not turn the new regime into the old regime, but it does soften the gap.

Frequently Asked Questions

Is the new regime mandatory from FY 2026-27?

No. The new regime is the default, not a compulsion. Under Section 115BAC of the Income-tax Act, 1961, and the corresponding Section 202 framework in the Income-tax Act, 2025, you can still opt for the old regime if you choose it correctly in your return. Salaried employees should also tell their employer in writing so that TDS is deducted under the right regime.

My CTC is ₹12 lakh. Which regime should I choose?

At ₹12 lakh CTC, the new regime usually wins. After the ₹75,000 standard deduction, taxable income is about ₹11,25,000. That falls within the Section 87A rebate band under the new regime, which can reduce tax to zero. To beat that in the old regime, you would need a very large and genuine deduction stack.

What if I cannot decide before the ITR deadline?

If you are a salaried taxpayer without business income, you can still choose the regime when filing the return, even if payroll TDS was deducted under the other regime. The result will reflect as either a refund or additional tax payable at filing.

Can I claim HRA in the new regime?

No. HRA exemption under Section 10(13A) is not available in the new regime. This is one of the biggest reasons the old regime still wins for some renters in metro cities.

Does switching regimes affect employer TDS?

Yes. Employers generally default to the new regime unless you communicate otherwise. If you want the old regime, tell your employer in writing early in the year. Otherwise the TDS trail may not match your final filing choice.

The Bottom Line

For most salaried taxpayers above ₹10 lakh, the new regime is better for FY 2026-27, and the advantage grows as income rises. The old regime still wins only for specific profiles: taxpayers with meaningful HRA, a sizeable home-loan interest claim, or a genuinely strong deduction stack built from 80C, 80D, NPS, and similar provisions.

The practical way to decide is simple: calculate both regimes using your actual numbers, not a rule of thumb. If the difference is small, the new regime is usually easier. If the old regime only wins because of assumptions, it is probably not the right choice.

If you are unsure about your regime choice, especially if you have business income and need to evaluate the one-time reversal under Section 115BAC(6), our tax advisory team can help you decide before filing. Start with the calculator at /tools/old-new-regime-breakeven or reach us through /contact.

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