Every year around January, payroll inboxes fill up with the same question: old regime or new? For FY 2026-27 the answer has shifted, because the new regime's slabs and rebate have widened enough that the old regime now needs a genuinely large deduction claim to compete.
The two structures, side by side
New regime slabs (Tax Year 2026-27)
Up to Rs. 4,00,000 - Nil
Rs. 4,00,001 to Rs. 8,00,000 - 5%
Rs. 8,00,001 to Rs. 12,00,000 - 10%
Rs. 12,00,001 to Rs. 16,00,000 - 15%
Rs. 16,00,001 to Rs. 20,00,000 - 20%
Rs. 20,00,001 to Rs. 24,00,000 - 25%
Above Rs. 24,00,000 - 30%
Old regime slabs
Up to Rs. 2,50,000 - Nil
Rs. 2,50,001 to Rs. 5,00,000 - 5%
Rs. 5,00,001 to Rs. 10,00,000 - 20%
Above Rs. 10,00,000 - 30%
The old regime's nil band extends to Rs. 3,00,000 for a senior citizen (60 to 79) and to Rs. 5,00,000 for a super senior citizen (80 and above), where the 5% band disappears entirely.
The three things that actually decide it
Standard Deduction. Rs. 75,000 under the new regime against Rs. 50,000 under the old. The new regime starts Rs. 25,000 ahead before you claim anything.
Rebate. Under the new regime, a rebate of up to Rs. 60,000 wipes out tax entirely if taxable income is Rs. 12,00,000 or below, with marginal relief tapering to roughly Rs. 12,70,588. Under the old regime the rebate is Rs. 12,500 and it stops at Rs. 5,00,000 of taxable income.
Deductions. The old regime allows HRA, the Section 123 basket, health insurance under Section 126, professional tax under Section 19 and a long list of Schedule II exemptions. The new regime allows almost none of them - the notable survivor is your employer's NPS contribution under Section 124.
Where the break-even actually sits
This is the part worth knowing. For a salaried person under 60, here is roughly how much you need to claim under the old regime just to match the new regime's tax:
Gross Rs. 8,00,000 - break-even at about Rs. 2,50,000 of deductions
Gross Rs. 12,00,000 - break-even at about Rs. 6,50,000
Gross Rs. 15,00,000 - break-even at about Rs. 5,44,000
Gross Rs. 19,00,000 - break-even at about Rs. 6,75,000
Gross Rs. 25,00,000 and above - break-even at about Rs. 8,00,000
Below those figures, the new regime wins. Above them, the old regime does.
The Rs. 12,00,000 row looks strange until you remember the rebate: the new regime charges nothing at all there, so the old regime has to reach zero tax too, which takes a very large claim.
A worked example
Gross salary Rs. 19,00,000, under 60, salaried.
Old regime. Standard Deduction Rs. 50,000, HRA exemption Rs. 2,40,000, Section 123 basket Rs. 1,50,000, additional NPS Rs. 50,000, health insurance Rs. 25,000, professional tax Rs. 2,500. Total deductions Rs. 5,17,500, taxable income Rs. 13,82,500, tax Rs. 2,36,340.
New regime. Standard Deduction Rs. 75,000, taxable income Rs. 18,25,000, tax Rs. 1,71,600.
The new regime wins by Rs. 64,740 - and that is with a near-maximum old regime claim. To flip the result you would need roughly Rs. 1,58,000 more in deductions, which for most salaried people means a much higher rent or a home loan.
Who still comes out ahead on the old regime
- High rent in a metro city alongside a large basic salary, so the HRA exemption is substantial
- A home loan with meaningful interest under the let-out or self-occupied property rules
- A full Rs. 1,50,000 Section 123 claim plus the Rs. 50,000 additional NPS contribution
- Health insurance premiums for both yourself and senior citizen parents
- Income comfortably above Rs. 24,00,000, where the 30% band bites either way and every deduction is worth 30 paise in the rupee
Two things people get wrong
Treating the new regime as opt-in. It is the default. If you say nothing, you are taxed under the new regime.
Comparing on gross salary instead of taxable income. The two regimes apply different standard deductions and completely different exemption sets, so the taxable figure that goes into the slabs is not the same number. Comparing gross to gross tells you nothing.
Run your own numbers
Break-even tables are useful for orientation but no substitute for your actual figures, because HRA in particular varies enormously with your basic salary and the city you live in. Our Tax Regime Calculator computes both regimes side by side for Tax Year 2026-27, with the full deduction set and a monthly TDS estimate, so you can see exactly where you land.
Confirm your position with a chartered accountant before you make the declaration to payroll - once the financial year is underway, switching is not always straightforward, and the right answer depends on details no calculator can see.