Every salaried person in India now chooses between two tax systems. The new regime has lower rates and a ₹12 lakh rebate but almost no deductions. The old regime has higher rates but lets you subtract investments, rent, insurance and home loan interest.
The right choice depends on one number: how much you can genuinely claim in deductions. This guide shows how to find it.
New vs old regime at a glance
| New regime (default) | Old regime | |
|---|---|---|
| Standard deduction | ₹75,000 | ₹50,000 |
| Tax-free up to (taxable income) | ₹12 lakh, through the rebate | ₹5 lakh, through the rebate |
| Top rate starts at | ₹24 lakh (30%) | ₹10 lakh (30%) |
| 80C, 80D, HRA, home loan interest | Not allowed | Allowed |
| Employer's NPS contribution | Allowed | Allowed |
| Highest surcharge | 25% | 37% |
How the comparison is calculated
New-regime tax = tax on (income − ₹75,000) at new slabsOld-regime tax = tax on (income − ₹50,000 − your deductions) at old slabsBetter regime = the one with lower total tax including cessThe calculator also finds your break-even deductions: the total you'd need to claim in the old regime, besides the standard deduction, for it to cost no more than the new one. If your real deductions are below that figure, the new regime wins.
| Salary | Deductions needed for the old regime to break even |
|---|---|
| ₹10 lakh | ₹4.51 lakh |
| ₹15 lakh | ₹5.44 lakh |
| ₹25 lakh | ₹8.01 lakh |
Worked example
Example: ₹15 lakh salary with typical deductions
Old-regime deductions: 80C ₹1,50,000, health insurance ₹25,000, HRA exemption ₹2,00,000, professional tax ₹2,400, plus the ₹50,000 standard deduction: ₹4,27,400 in all.
Old regime: taxable ₹10,72,600, tax ₹1,39,651.
New regime: taxable ₹14,25,000, tax ₹97,500.
The new regime saves ₹42,151 a year, even with ₹3.77 lakh of deductions, because the break-even at this salary is ₹5.44 lakh.
When the old regime still wins
- You pay high rent in a metro and get a large HRA exemption.
- You have a home loan on a house you live in, with interest close to ₹2 lakh a year.
- You already fill the full ₹1.5 lakh of 80C through EPF, PPF or ELSS, and pay health insurance for yourself and your parents.
- Your salary is high enough that the deductions above add up to more than the break-even figure.
For most people earning up to about ₹15 lakh with modest deductions, the new regime is cheaper, and incomes up to ₹12.75 lakh pay no tax at all in it.
Can you switch every year?
Salaried people with no business income can pick a regime every year when filing the return, whatever they told the employer for TDS. People with business or professional income (including freelancers) can switch from the new regime to the old only once in their lifetime, so they should decide carefully.
Tell your employer your choice at the start of the year so the right amount of TDS is deducted. You can still change it when you file your return.
How to use this calculator
- Enter your annual gross salary.
- Add up your old-regime deductions: 80C, 80D, HRA exemption, home loan interest and professional tax.
- Compare the result with the break-even amount.
FAQs
Who should choose the old regime?
Usually people with large deductions: a home loan, high rent with HRA, and full 80C and 80D investments. Use the break-even figure to check.
Can I switch regimes every year?
Salaried people without business income can usually choose each year when filing. People with business or freelance income have stricter limits on switching.
Sources
- Business Today: tax slabs for FY 2026-27 after Budget 2026
- Income Tax Department: tax rates and surcharge
- ClearTax: Income-tax Rules 2026 and HRA cities
- ClearTax: Section 44ADA presumptive tax
- ThePrint (PTI): EPF rate of 8.25% for 2025-26 ratified
Results are estimates for resident individuals under 60 and aren't tax, legal or financial advice. For your own return, check with a chartered accountant. Spotted a mistake? Tell us.