For tax year 2026-27 the new regime is the default, and a person whose only income is salary pays no tax up to a salary of ₹12.75 lakh. The old regime only costs less if your deductions and exemptions are large. This guide shows how large, salary by salary.
The two sets of slab rates
| New regime (section 202) | Rate |
|---|---|
| Up to ₹4 lakh | Nil |
| ₹4 lakh to ₹8 lakh | 5% |
| ₹8 lakh to ₹12 lakh | 10% |
| ₹12 lakh to ₹16 lakh | 15% |
| ₹16 lakh to ₹20 lakh | 20% |
| ₹20 lakh to ₹24 lakh | 25% |
| Above ₹24 lakh | 30% |
| Old regime | Rate |
|---|---|
| Up to ₹2.5 lakh | Nil |
| ₹2.5 lakh to ₹5 lakh | 5% |
| ₹5 lakh to ₹10 lakh | 20% |
| Above ₹10 lakh | 30% |
Both regimes add 4% health and education cess. Surcharge applies only above ₹50 lakh of income, and in the new regime it stops at 25%. The standard deduction for salary is ₹75,000 in the new regime and ₹50,000 in the old. The rebate is up to ₹60,000 in the new regime for taxable income up to ₹12 lakh, and up to ₹12,500 in the old for taxable income up to ₹5 lakh.
What you give up in the new regime
- The HRA exemption and leave travel allowance
- Chapter VIII deductions, the kind earlier claimed under sections 80C and 80D
- Interest on a home loan for a house you live in
- Professional tax
You keep the ₹75,000 standard deduction and the deduction for your employer’s contribution to NPS, up to 14% of salary (section 124).
The break-even, salary by salary
The table is for a resident individual below 60 whose only income is salary. The last column is the total of deductions and exemptions you would need in the old regime, on top of its ₹50,000 standard deduction, before it costs less than the new regime.
| Salary | Tax in the new regime, with cess | Old regime costs less only if deductions exceed |
|---|---|---|
| Up to ₹12,75,000 | Nil | Never: the new regime already gives nil tax |
| ₹15,00,000 | ₹97,500 | ₹5,43,750 |
| ₹18,00,000 | ₹1,50,800 | ₹6,41,667 |
| ₹20,00,000 | ₹1,92,400 | ₹7,08,333 |
| ₹25,00,000 | ₹3,19,800 | ₹8,00,000 |
From a salary of ₹24.75 lakh up to ₹50 lakh, both regimes tax each extra rupee at 30%, so the break-even stays at ₹8 lakh of deductions.
How and when you choose
- No business or professional income: you choose each year when you file the return. The new regime applies unless you opt out in the return.
- Business or professional income: you opt out by the return due date, and the choice carries on to later years. You can withdraw it only once; after that you cannot opt out again while you have business income.
What to do now
- Add up the deductions and exemptions you will actually have for 2026-27, such as HRA, home-loan interest and Chapter VIII investments and insurance.
- Compare the total with the table above for your salary.
- Run both regimes in the income tax calculator before you decide.
Common questions
Can a salaried person switch regimes every year?
Yes. Without business or professional income, you choose afresh when you file each year’s return.
Is the new regime compulsory?
No. It is the default, but you can opt out and use the old regime.
Is the standard deduction allowed in both regimes?
Yes: ₹75,000 in the new regime and ₹50,000 in the old, or the salary itself if it is lower.
Is my employer’s NPS contribution allowed in the new regime?
Yes, up to 14% of salary, under section 124.
Run your own numbers with the income tax calculator and the HRA calculator. For how the ₹12 lakh rebate works, read no tax up to ₹12 lakh, and for the wider changes, what the Income-tax Act, 2025 changes. We file returns under both regimes: see income tax return filing.
Sources: Income-tax Act, 2025, sections 19, 124, 156, 202 and 263; Finance Act, 2026; Budget Speech 2025-26, paragraph 156 (the ₹12.75 lakh salary figure); Income Tax Department. Tax and break-even figures are our calculations from these slab rates.