Old vs new tax regime for 2026-27: compare in 3 steps
Gather your salary figures, work out your HRA exemption, then run both regimes side by side. One printable page keeps the figures for your employer's declaration and your return.
By Bulan Sarkar · Updated
For a salaried person under 60, the old regime costs less only when deductions on top of the standard deduction cross a break-even figure: ₹5,43,750 at a ₹15 lakh salary, ₹7,08,334 at ₹20 lakh and ₹8,00,000 from about ₹25 lakh to ₹50 lakh. Up to ₹12.75 lakh of salary the new regime charges no tax at all. The usual capped deductions without HRA add up to only ₹4,27,500, so the comparison mostly turns on your HRA exemption. Three steps settle it: gather your figures, work out the HRA exemption, then run both regimes.
Source: Income Tax Department, Tax Reference Tables (Income-tax Act, 2025), checked Sep 2026. Numbers only, not tax advice. The arithmetic follows the official rates; your employer's TDS and your return settle the final tax.
The decision: compare the regimes yourself?
Yes, if salary is your main income and your deductions are the usual ones: rent, EPF and other section 123 items, health insurance, your own NPS, home loan interest.
If your salary is up to ₹12.75 lakh and salary is your only income, the new regime's tax is nil and there is nothing to compare.
Talk to a chartered accountant if you have business or professional income, capital gains, income from abroad, salary arrears or a notice from the department. The rules for those cases go beyond this arithmetic.
The steps, in order
Gather your figures
Have ready:salary slip or CTC letterrent receipts and cityinvestment and insurance proofshome loan interest certificate
Write down your gross salary, your basic pay plus DA, the HRA you receive and the rent you pay in a year. Then list your old-regime deductions: section 123 (old 80C, up to ₹1,50,000, which already includes your own EPF contribution), your own NPS under section 124 (₹50,000), health insurance under section 126, home loan interest under section 22 (up to ₹2,00,000) and professional tax.
Work out your HRA exemption
Have ready:basic pay plus DAHRA receivedrent paidcity
Skip this step if you pay no rent. The exemption is the least of three amounts: the HRA you receive, rent minus 10% of basic plus DA, and 50% of basic plus DA in Delhi, Mumbai, Kolkata, Chennai, Bengaluru, Hyderabad, Pune or Ahmedabad (40% elsewhere). Carry the exempt amount, not the HRA received, into step 3.
Run both regimes and read the break-even
Have ready:gross salaryHRA exemption from step 2deduction list from step 1
Enter the figures in the old vs new regime calculator. It shows the tax under each regime and the break-even: the deductions the old regime needs at your salary to cost no more than the new one. If your total is below the break-even, the new regime costs less. Write both tax figures on the worksheet, tell your employer which regime to use for TDS, and run it again when you file your return.
What goes wrong
Variants: what changes the steps
Age 60 and over
The old regime's basic exemption is ₹3 lakh (₹5 lakh from age 80), so the break-even above ₹12.75 lakh is ₹8,333 to ₹12,500 lower. The new regime is the same at every age.
Salary between ₹12 lakh and ₹13.5 lakh
Marginal relief on the section 156 rebate makes new-regime tax climb fast here: ₹26,000 at ₹13 lakh. The break-even drops to about ₹5.05 lakh near ₹13.5 lakh.
Rent outside the eight cities
The third HRA limit is 40% of basic plus DA instead of 50%, so the same rent gives a smaller exemption and the new regime wins more often.
Income above ₹50 lakh
Surcharge starts. Large deductions can pull old-regime income back under a surcharge line, so the old regime can win with less than ₹8 lakh. Run the exact figures.
Tips and tricks
- Your own EPF contribution counts under section 123. Check your salary slip before you buy anything to fill the ₹1,50,000.
- From 2026-27 the 50% HRA limit covers eight cities: Delhi, Mumbai, Kolkata, Chennai, Bengaluru, Hyderabad, Pune and Ahmedabad. The test is where your rented home is, not where the office is.
- Fill in the worksheet as you go. In January you can re-run the comparison from written figures instead of hunting for slips again.
- If the two tax figures are within a few thousand rupees, the gap is small either way. Note it on the worksheet and recheck once rent and proofs are final.
- Keep the rent receipts and the home loan interest certificate with the worksheet. Your employer asks for them when proofs are due.
What we would do
We would run the three steps with real figures now, write both tax amounts and the break-even on the worksheet, and tell the employer the regime that comes out lower. We would run it again in January when rent and proofs are final, and once more at filing. We do not suggest buying any investment or insurance to reach the break-even; that is a money decision outside this site.
Print the working copy
Old vs new regime: 3-step working copy, 2026-27, from the Tax Regime Kit 2026-27. One A4 page with tick boxes and blanks; it prints in black and white.
- 1. Your figures
- 2. HRA exemption (least of three)
- Old-regime deductions
- 3. Result
- Record
Frequently asked questions
Which tax regime is better for a ₹15 lakh salary?
Up to what salary is there no tax in the new regime?
What is the break-even in the old vs new regime comparison?
Do I have to stay with the regime I told my employer?
The source we built this on
Break-even figures were computed by our old vs new regime calculator on these rates and checked against the Income Tax Department's online Income & Tax Calculator on 30 September 2026.
Numbers only, not tax advice. The arithmetic follows the official rates; your employer's TDS and your return settle the final tax.