New vs Old Tax Regime: How Many Deductions Do You Need to Break Even?

New regime (default): no tax up to ₹4 lakh of taxable income, then 5%, 10%, 15%, 20%, 25% and 30% above ₹24 lakh. Salaried individuals get a ₹75,000 standard deduction, and a rebate makes tax nil if taxable income is up to ₹12 lakh. Almost all other deductions are not allowed, apart from items such as the employer’s NPS contribution.

Old regime (below 60): nil up to ₹2.5 lakh, 5% to ₹5 lakh, 20% to ₹10 lakh and 30% above, with a ₹50,000 standard deduction and a rebate for taxable income up to ₹5 lakh. Deductions such as 80C (up to ₹1.5 lakh), NPS under 80CCD(1B) (₹50,000), home-loan interest (up to ₹2 lakh) and HRA exemption are available. Both add 4% cess. These slab figures match the Income Tax Department’s published AY 2026-27 table; summaries of Budget 2026 report no slab change for FY 2026-27, but confirm on the official portal.

With ₹3.75 lakh of old-regime deductions (₹1.5 lakh under 80C, ₹50,000 NPS and ₹1.75 lakh of other deductions or exemptions — a fairly generous set), the two regimes compare like this:

At ₹12.75 lakh or below the new regime charges nothing. In the middle range the lines are close; the gap depends heavily on how much you can actually claim.

The more useful question is how much you must claim for the old regime to be no worse. For a salaried person below 60:

Read it this way: at ₹15 lakh, if your total deductions and exemptions (80C, NPS, HRA, home-loan interest and so on) are below the figure shown, the new regime is cheaper. Many salaried people find their claimable total is well short of it, which is why the new regime became the default for most.

Under the old regime the rebate ends abruptly: tax is nil at ₹5 lakh taxable income, but a rupee above that loses the whole rebate, with no marginal relief. Under the new regime there is marginal relief just above ₹12 lakh: your tax cannot exceed the income above ₹12 lakh, so earning ₹10,000 more never costs you more than ₹10,000 in tax. Surcharge above ₹50 lakh also comes with marginal relief in both regimes.

1. Add up every deduction you can genuinely claim: 80C, NPS, 80D, home-loan interest, HRA.
2. Run both regimes in the income tax calculator.
3. Check against your Form 16 and the Income Tax Department’s own tools before filing.
4. Remember that investing purely to save tax can be a poor trade if the investment does not suit you.

This article is educational and covers salary-type slab income for resident individuals; capital gains, business income and TDS credits are separate. It is not tax advice.