Old or new tax regime: which is better for you in 2026-27?
Draft: not yet reviewed by a CA.
For most salaried people the new regime gives lower tax in 2026-27, because resident taxpayers pay nothing on taxable income up to ₹12 lakh. The old regime can still win if your deductions are large, such as HRA, a home loan and full 80C. Compare your own figures before deciding.
What changes between the two regimes?
The new regime has lower slab rates and a higher standard deduction, ₹75,000 for salaried people. In exchange, you give up most deductions, including 80C, 80D, HRA and home loan interest on a self-occupied home.
The old regime keeps those deductions but has higher slab rates and a ₹50,000 standard deduction.
How do you know which one wins?
Add up the deductions you really claim. The larger they are, the better the old regime looks. Our income tax calculator works out both and shows the slab-by-slab figures.
Example
| A salaried resident below 60 earning ₹14,00,000 | New regime | Old regime |
|---|---|---|
| Deductions | ₹75,000 standard | ₹50,000 standard, ₹1,50,000 80C, ₹25,000 80D |
| Taxable income | ₹13,25,000 | ₹11,75,000 |
| Tax including 4% cess | ₹81,900 | ₹1,71,600 |
Here the new regime saves ₹89,700. Add a large HRA or home loan and the gap narrows.
Can NRIs use the same comparison?
Yes, but the ₹12 lakh rebate is for residents. Without it, an NRI pays tax from the first slab above ₹4 lakh under the new regime. Higher age-based slabs in the old regime are also for residents only.
Can you switch?
Salaried people with no business income can generally choose each year when filing. People with business income have stricter limits on switching back. Ask your expert before you decide, if you have business income.
Estimate for planning, not tax advice.