Old vs New Tax Regime: Which Is Better in 2026?

New regime or old regime? The answer flips with your salary and deductions. Here are two worked examples with real FY 2025-26 maths — then run your own numbers in our old vs new regime calculator.

Example 1: ₹12 lakh salary, small deductions — NEW wins big

• Salary: ₹12,00,000, 80C ₹1,50,000, 80D ₹25,000, salaried
• New regime: taxable = 12,00,000 − 75,000 (standard deduction) = ₹11,25,000. Under ₹12 lakh, so the 87A rebate wipes it out → tax ₹0.
• Old regime: taxable = 12,00,000 − 50,000 − 1,50,000 − 25,000 = ₹9,75,000 → slab ₹1,07,500 + 4% cess = ₹1,11,800.
• Verdict: new regime wins by ₹1,11,800. With modest deductions, the 87A zero-tax zone beats everything the old regime offers.

Example 2: ₹20 lakh salary, heavy deductions — OLD fights back

• Salary: ₹20,00,000, 80C ₹1,50,000, 80D ₹1,00,000, home-loan interest ₹2,00,000, HRA exempt ₹3,00,000, NPS ₹50,000
• New regime: taxable = 20,00,000 − 75,000 = ₹19,25,000 → slab ₹1,85,000 + 4% cess = ₹1,92,400.
• Old regime: taxable = 20,00,000 − 50,000 − 1,50,000 − 1,00,000 − 2,00,000 − 3,00,000 − 50,000 = ₹11,50,000 → slab ₹1,57,500 + 4% cess = ₹1,63,800.
• Verdict: old regime wins by ₹28,600. Big HRA + home-loan interest + 80C is the classic combination where old still beats new.

The 2-minute rule of thumb

• Deductions below ~₹2 lakh total (just 80C + standard): new regime almost always wins, thanks to 87A up to ₹12L taxable.
• Deductions above ~₹4 lakh (HRA + home loan + 80C + NPS): run both — old frequently wins.
• Between ₹2–4 lakh: genuinely close. Calculate; don't guess.

What the calculator does not cover

Salary income, HRA, 80C/80D, home-loan interest, NPS and senior slabs for FY 2025-26. Business income (see Salary vs Business), capital gains (see Capital Gains calculator), rental and interest income need separate treatment. Verify before filing on incometax.gov.in.

Try your salary in the regime calculator — it takes 2 minutes and shows both taxes side by side.