Key points
- Slab rates are unchanged by Budget 2026; they apply to FY 2025-26 and tax year 2026-27.
- Salary up to ₹12.75 lakh with no other income: nil tax in the new regime.
- At ₹15 lakh salary, the old regime wins only if deductions beyond ₹50,000 exceed about ₹5.44 lakh.
- Above ₹24 lakh, the break-even is ₹8 lakh of deductions.
Tax rates in both regimes
Budget 2026 did not change the slab rates, so the rates below apply to FY 2025-26 (the return filed in 2026) and to tax year 2026-27, the first year under the Income-tax Act, 2025. Rates are shown for individuals below 60; surcharge above ₹50 lakh is ignored for simplicity.
| Income slab (new regime) | Rate |
|---|---|
| Up to ₹4,00,000 | Nil |
| ₹4,00,001 – ₹8,00,000 | 5% |
| ₹8,00,001 – ₹12,00,000 | 10% |
| ₹12,00,001 – ₹16,00,000 | 15% |
| ₹16,00,001 – ₹20,00,000 | 20% |
| ₹20,00,001 – ₹24,00,000 | 25% |
| Above ₹24,00,000 | 30% |
| Income slab (old regime) | Rate |
|---|---|
| Up to ₹2,50,000 | Nil |
| ₹2,50,001 – ₹5,00,000 | 5% |
| ₹5,00,001 – ₹10,00,000 | 20% |
| Above ₹10,00,000 | 30% |
In the new regime, the rebate makes tax nil where taxable income does not exceed ₹12 lakh (rebate up to ₹60,000). With the ₹75,000 standard deduction, a salaried person with no other income pays no tax up to ₹12.75 lakh of salary. Just above ₹12 lakh, marginal relief caps the tax at the amount by which income exceeds ₹12 lakh. The rebate does not apply to special-rate income such as capital gains taxed under the special rate provisions.
What each regime allows
| Item | New regime | Old regime |
|---|---|---|
| Standard deduction (salary) | ₹75,000 | ₹50,000 |
| 80C (PF, PPF, ELSS, life insurance, principal repayment) | No | Up to ₹1.5 lakh |
| 80D health insurance | No | Up to ₹25,000 / ₹50,000 (senior citizens), plus parents |
| HRA exemption | No | Yes |
| Home-loan interest, self-occupied house | No | Up to ₹2 lakh |
| Employer contribution to NPS | Yes, up to 14% of salary | Yes, up to 10% of salary |
| Default regime | Yes | Must be chosen |
The break-even test
The quickest way to decide: add up every deduction and exemption you would actually claim in the old regime, over and above the ₹50,000 standard deduction. If that total is higher than the break-even figure for your salary, the old regime saves tax. If not, the new regime does.
| Gross salary | Tax in new regime | Old-regime deductions needed to match |
|---|---|---|
| ₹8,00,000 | ₹0 | ₹2,50,000 |
| ₹10,00,000 | ₹0 | ₹4,50,000 |
| ₹12,00,000 | ₹0 | ₹6,50,000 |
| ₹12,75,000 | ₹0 | ₹7,25,000 |
| ₹15,00,000 | ₹97,500 | ₹5,44,000 |
| ₹18,00,000 | ₹1,50,800 | ₹6,42,000 |
| ₹20,00,000 | ₹1,92,400 | ₹7,09,000 |
| ₹25,00,000 | ₹3,19,800 | ₹8,00,000 |
| ₹30,00,000 | ₹4,75,800 | ₹8,00,000 |
Two patterns stand out. Up to about ₹12.75 lakh, the new regime is almost impossible to beat because tax is nil. Above ₹24 lakh, the break-even settles at ₹8 lakh of deductions, because both regimes are taxing the top slice at 30%.
Three worked examples
₹10 lakh salary, ₹1.5 lakh of 80C
| Step | New regime | Old regime |
|---|---|---|
| Gross salary | ₹10,00,000 | ₹10,00,000 |
| Standard deduction | −₹75,000 | −₹50,000 |
| Other deductions and exemptions | Nil | −₹1,50,000 |
| Taxable income | ₹9,25,000 | ₹8,00,000 |
| Tax including 4% cess | ₹0 | ₹75,400 |
Lower tax: New regime, by ₹75,400.
₹15 lakh salary, HRA + 80C + 80D of ₹3.75 lakh
| Step | New regime | Old regime |
|---|---|---|
| Gross salary | ₹15,00,000 | ₹15,00,000 |
| Standard deduction | −₹75,000 | −₹50,000 |
| Other deductions and exemptions | Nil | −₹3,75,000 |
| Taxable income | ₹14,25,000 | ₹10,75,000 |
| Tax including 4% cess | ₹97,500 | ₹1,40,400 |
Lower tax: New regime, by ₹42,900.
₹20 lakh salary, HRA + 80C + home-loan interest of ₹5.5 lakh
| Step | New regime | Old regime |
|---|---|---|
| Gross salary | ₹20,00,000 | ₹20,00,000 |
| Standard deduction | −₹75,000 | −₹50,000 |
| Other deductions and exemptions | Nil | −₹5,50,000 |
| Taxable income | ₹19,25,000 | ₹14,00,000 |
| Tax including 4% cess | ₹1,92,400 | ₹2,41,800 |
Lower tax: New regime, by ₹49,400.
You can run your own numbers in the income tax calculator, and check HRA separately in the HRA calculator, which applies the 50% rate for eight cities (including Pune) from tax year 2026-27.
Can you switch every year?
- Salaried, no business income: you can choose the regime each year in your return, regardless of what you told your employer for TDS.
- With business or professional income: opting out of the new regime is done through a separate form filed by the due date. Once you have opted out, you can come back to the new regime only once, and after that the old regime is no longer available. Choose carefully.
- The option must be exercised in a return filed by the due date. A belated return is filed under the default new regime.
Frequently asked questions
Is the new tax regime better for a salary of ₹12 lakh?
Did Budget 2026 change the new regime slabs?
Can I claim HRA in the new regime?
I told my employer new regime. Can I choose old regime in my ITR?
Chartered Accountant since 2019, with experience across income-tax litigation, CFO advisory and corporate finance in hospitality, agri-tech and manufacturing. Maintains the TaxSphere case-law library.