Old vs new tax regime: which is better in 2026-27?

⚡ Short answerFor most taxpayers without large deductions, the new regime (the default for AY 2026-27) wins — income up to ₹12 lakh is effectively tax-free and the slabs are lower. The old regime beats it only when your total deductions (80C + 80D + HRA + home-loan interest) are large, typically above ₹3.5–4 lakh. Always compute both before choosing.

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When the new regime wins

If you don't claim big deductions — no large 80C investment, no home loan, no HRA — the new regime's lower slabs and ₹12 lakh rebate threshold give a lower tax. It is also simpler, with a ₹75,000 standard deduction for salary.

When the old regime wins

If you max out 80C (₹1.5 lakh), pay home-loan interest (₹2 lakh under Section 24b), claim HRA and have health insurance under 80D, the combined deductions can make the old regime cheaper. The break-even depends on your income and total deductions.

Related questions

Can I switch regimes every year?

Salaried taxpayers without business income can choose the regime afresh each year while filing. Those with business or professional income can switch back to the old regime only once, using Form 10-IEA.

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General information for AY 2026-27, not professional advice. Rules change with each Finance Act / notification and depend on your facts — verify with a licensed CA or advocate before acting.