Every April, the same question haunts every salaried Indian: "Should I switch to the new tax regime or stay with the old one?"
Your HR sends you a form. Your CA gives you a confusing answer. Your colleague says "new is better" but can't explain why. And you end up guessing — which can cost you anywhere from ₹5,000 to ₹50,000 in extra tax per year.
Let us settle this once and for all. This article gives you the exact tax amount under both regimes for every major salary bracket, with zero jargon. Read your salary row, and you'll know your answer in 2 minutes.
What Changed in 2025 and 2026?
The Income Tax Act 2025 (effective April 1, 2026) simplified the new regime further:
New Regime Tax Slabs (FY 2026-27):
| Annual Income | Tax Rate |
|---|---|
| Up to ₹4,00,000 | 0% |
| ₹4,00,001 – ₹8,00,000 | 5% |
| ₹8,00,001 – ₹12,00,000 | 10% |
| ₹12,00,001 – ₹16,00,000 | 15% |
| ₹16,00,001 – ₹20,00,000 | 20% |
| ₹20,00,001 – ₹24,00,000 | 25% |
| Above ₹24,00,000 | 30% |
Key benefit added: Section 87A tax rebate now applies up to ₹12,00,000 income — meaning zero tax for incomes up to ₹12 Lakhs under the new regime (after standard deduction of ₹75,000).
Old Regime Tax Slabs (FY 2026-27):
| Annual Income | Tax Rate |
|---|---|
| Up to ₹2,50,000 | 0% |
| ₹2,50,001 – ₹5,00,000 | 5% |
| ₹5,00,001 – ₹10,00,000 | 20% |
| Above ₹10,00,000 | 30% |
The old regime allows deductions under Section 80C (₹1.5L), 80D (health insurance), HRA, home loan interest, and more. These deductions reduce your taxable income, which is why the old regime still works for people with large investments.
Side-by-Side Comparison: ₹8 Lakh Annual Salary
Gross Salary: ₹8,00,000 per year
Under New Regime:
| Step | Amount |
|---|---|
| Gross Salary | ₹8,00,000 |
| Less: Standard Deduction | −₹75,000 |
| Taxable Income | ₹7,25,000 |
| Tax on ₹0 to ₹4L | ₹0 |
| Tax on ₹4L to ₹7.25L at 5% | ₹16,250 |
| Tax Before Cess | ₹16,250 |
| 4% Health & Education Cess | ₹650 |
| Total Tax Payable | ₹16,900 |
Under Old Regime (with maximum deductions):
| Step | Amount |
|---|---|
| Gross Salary | ₹8,00,000 |
| Less: Standard Deduction | −₹50,000 |
| Less: Section 80C (PPF/ELSS/LIC) | −₹1,50,000 |
| Less: Section 80D (health insurance) | −₹25,000 |
| Taxable Income | ₹5,75,000 |
| Tax on ₹0 to ₹2.5L | ₹0 |
| Tax on ₹2.5L to ₹5L at 5% | ₹12,500 |
| Tax on ₹5L to ₹5.75L at 20% | ₹15,000 |
| Tax Before Cess | ₹27,500 |
| 4% Cess | ₹1,100 |
| Total Tax Payable | ₹28,600 |
✅ Winner at ₹8 Lakh: New Regime saves ₹11,700
(This assumes you max out 80C and 80D. If you don't invest in PPF/ELSS/LIC, new regime saves even more.)
Side-by-Side Comparison: ₹10 Lakh Annual Salary
Gross Salary: ₹10,00,000 per year
Under New Regime:
| Step | Amount |
|---|---|
| Gross Salary | ₹10,00,000 |
| Less: Standard Deduction | −₹75,000 |
| Taxable Income | ₹9,25,000 |
| Tax on ₹0 to ₹4L | ₹0 |
| Tax on ₹4L to ₹8L at 5% | ₹20,000 |
| Tax on ₹8L to ₹9.25L at 10% | ₹12,500 |
| Tax Before Cess | ₹32,500 |
| 4% Cess | ₹1,300 |
| Total Tax Payable | ₹33,800 |
Under Old Regime (with maximum deductions):
| Step | Amount |
|---|---|
| Gross Salary | ₹10,00,000 |
| Less: Standard Deduction | −₹50,000 |
| Less: Section 80C | −₹1,50,000 |
| Less: Section 80D | −₹25,000 |
| Taxable Income | ₹7,75,000 |
| Tax on ₹0 to ₹2.5L | ₹0 |
| Tax on ₹2.5L to ₹5L at 5% | ₹12,500 |
| Tax on ₹5L to ₹7.75L at 20% | ₹55,000 |
| Tax Before Cess | ₹67,500 |
| 4% Cess | ₹2,700 |
| Total Tax Payable | ₹70,200 |
✅ Winner at ₹10 Lakh: New Regime saves ₹36,400
Side-by-Side Comparison: ₹12 Lakh Annual Salary
This is the most important bracket to understand because the 87A rebate changes everything.
Under New Regime:
| Step | Amount |
|---|---|
| Gross Salary | ₹12,00,000 |
| Less: Standard Deduction | −₹75,000 |
| Taxable Income | ₹11,25,000 |
| Tax (calculated on slab) | ₹56,250 |
| Less: Section 87A Rebate | −₹56,250 (since taxable income < ₹12L) |
| Total Tax Payable | ₹0 |
Wait — zero tax on ₹12 lakh salary? Yes. Under the new regime, if your taxable income (after standard deduction) is below ₹12 Lakhs, the 87A rebate wipes your entire tax to zero.
(Note: ₹12L gross − ₹75K standard deduction = ₹11.25L taxable. Since this is below ₹12L, the full 87A rebate applies.)
Under Old Regime (with maximum deductions):
| Step | Amount |
|---|---|
| Gross Salary | ₹12,00,000 |
| Less: Standard Deduction | −₹50,000 |
| Less: Section 80C | −₹1,50,000 |
| Less: Section 80D | −₹25,000 |
| Taxable Income | ₹9,75,000 |
| Tax on ₹2.5L to ₹5L at 5% | ₹12,500 |
| Tax on ₹5L to ₹9.75L at 20% | ₹95,000 |
| Tax Before Cess | ₹1,07,500 |
| 4% Cess | ₹4,300 |
| Total Tax Payable | ₹1,11,800 |
✅ Winner at ₹12 Lakh: New Regime saves ₹1,11,800 (you pay ZERO tax!)
Side-by-Side Comparison: ₹15 Lakh Annual Salary
Under New Regime:
| Step | Amount |
|---|---|
| Gross Salary | ₹15,00,000 |
| Less: Standard Deduction | −₹75,000 |
| Taxable Income | ₹14,25,000 |
| Tax on ₹0 to ₹4L | ₹0 |
| Tax on ₹4L to ₹8L at 5% | ₹20,000 |
| Tax on ₹8L to ₹12L at 10% | ₹40,000 |
| Tax on ₹12L to ₹14.25L at 15% | ₹33,750 |
| Tax Before Cess | ₹93,750 |
| 4% Cess | ₹3,750 |
| Total Tax Payable | ₹97,500 |
Under Old Regime (with maximum deductions):
| Step | Amount |
|---|---|
| Gross Salary | ₹15,00,000 |
| Less: Standard Deduction | −₹50,000 |
| Less: Section 80C | −₹1,50,000 |
| Less: Section 80D | −₹25,000 |
| Less: Home Loan Interest (80EE) | −₹2,00,000 |
| Less: HRA (estimated 40% of basic) | −₹2,00,000 |
| Taxable Income | ₹9,25,000 |
| Tax before cess | ₹92,500 |
| 4% Cess | ₹3,700 |
| Total Tax Payable | ₹96,200 |
⚖️ At ₹15 Lakh: Old regime wins IF you have home loan + HRA — saves ~₹1,300 (But if you don't claim HRA or home loan interest, new regime saves ₹60,000+)
The Master Summary Table
| Gross Salary | New Regime Tax | Old Regime Tax (max deductions) | Winner |
|---|---|---|---|
| ₹8,00,000 | ₹16,900 | ₹28,600 | ✅ New (saves ₹11,700) |
| ₹10,00,000 | ₹33,800 | ₹70,200 | ✅ New (saves ₹36,400) |
| ₹12,00,000 | ₹0 | ₹1,11,800 | ✅ New (saves ₹1,11,800) |
| ₹15,00,000 | ₹97,500 | ₹96,200* | ⚖️ Old (if HRA + home loan) |
| ₹20,00,000 | ₹1,72,500 | ₹2,02,800* | ✅ New (saves ₹30,300) |
*Old regime figures assume full 80C + 80D + HRA + home loan interest deductions
So When Should You Choose the Old Regime?
The old regime is still better only if all these conditions are true:
- You claim HRA (you pay rent and it qualifies)
- You have a home loan and claim ₹2L interest deduction under Section 24(b)
- You max out Section 80C (₹1.5L) — PPF, ELSS, LIC, EPF
- You have health insurance and claim Section 80D (₹25,000+)
- Your combined deductions exceed ₹3.75 Lakhs above the new regime's standard deduction advantage
If even one of these is missing, the new regime almost always wins.
3 Mistakes People Make When Choosing
Switching without calculating: Many people pick the old regime out of habit, not math. Run the actual numbers for your specific situation before deciding.
Forgetting the 87A rebate: At ₹12 Lakh salary, the new regime gives you completely zero tax. People who don't know about 87A are paying over ₹1 Lakh unnecessarily.
Comparing wrong numbers: Always compare post-deduction taxable income, not gross salary. Two people earning ₹15 Lakhs can have very different tax bills depending on HRA, rent paid, home loan, and investments.
👉 Calculate Your Exact Tax in 30 Seconds
Use our Free Income Tax Calculator — enter your salary, pick your deductions, and instantly see your tax under both regimes side by side. No signup needed.
Can You Switch Regime Every Year?
Yes — salaried employees can switch between new and old regime every financial year. You simply inform your employer at the start of the year. If you miss the deadline, you can still choose when filing your ITR.
Self-employed individuals and business owners can switch once — from old to new — and then cannot switch back easily.
Final Thoughts
For most salaried Indians earning below ₹15 Lakhs, the new tax regime is the clear winner in 2026 — especially at the ₹12 Lakh bracket where the 87A rebate makes your entire tax zero.
The old regime only makes sense if you are disciplined about investments (maxing 80C), paying rent (HRA), and have a home loan running. If you don't tick all those boxes, you're likely paying extra tax for no reason.
Run the numbers for your exact salary, and let the math decide.
Quick FAQs
1. Is the new tax regime better than old for ₹10 lakh salary?
Yes. At ₹10 Lakh salary, the new regime results in approximately ₹33,800 tax compared to ₹70,200 under the old regime (with max deductions). New regime saves you around ₹36,400.
2. Is income tax zero for ₹12 lakh salary in new regime?
Yes, effectively. Gross salary of ₹12 Lakhs minus ₹75,000 standard deduction gives taxable income of ₹11.25 Lakhs. Since this is below ₹12 Lakhs, the Section 87A rebate cancels the entire tax liability to zero.
3. Which regime is better for ₹15 lakh salary?
It depends on your deductions. If you claim HRA + home loan interest + full 80C + 80D, the old regime can save a small amount. Without these, the new regime is better. Use a calculator with your actual deduction numbers to confirm.
4. Can I switch between new and old tax regime every year?
Salaried employees can switch every financial year by informing their employer. Self-employed individuals can switch from old to new once, with limited ability to switch back.
5. What is the standard deduction in the new regime for 2026?
The standard deduction under the new regime for FY 2026-27 is ₹75,000 for salaried employees and pensioners.
6. What deductions are not allowed in the new tax regime?
The new regime does not allow Section 80C (PPF, ELSS, LIC), 80D (health insurance), HRA deduction, home loan interest under Section 24(b), or most other Chapter VI-A deductions. Only the standard deduction of ₹75,000 is allowed.
7. How do I calculate which tax regime saves more for my salary?
Subtract all applicable deductions from your gross salary under the old regime to get taxable income. Calculate tax on both taxable incomes using the respective slabs. The regime with lower final tax (after cess) is the better choice for you.