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New vs Old Tax Regime: Which Is Better?

6 min read · Updated September 26, 2026 · by Thomas M, Registered Investment Adviser (South Carolina)

New vs Old Tax Regime: Which Is Better? – feature image

The new regime has lower slab rates and almost no deductions; the old regime has higher slab rates but lets you claim deductions. Which is cheaper depends on your numbers. This guide shows how to compare them.

The two sets of slabs

New regime: nil to ₹4 lakh, then 5%, 10%, 15%, 20%, 25% and 30% above ₹24 lakh, with a ₹75,000 standard deduction and a rebate that makes tax nil up to ₹12 lakh of taxable income. Old regime (below 60): nil to ₹2.5 lakh, 5% to ₹5 lakh, 20% to ₹10 lakh and 30% above, with a ₹50,000 standard deduction and rebate up to ₹5 lakh. Both add 4% cess.

Example 1: ₹15 lakh, no deductions

New regime tax: ₹97,500.00. Old regime: ₹2,57,400.00. Better: New regime — saves ₹1,59,900.00.

Example 2: ₹15 lakh with ₹3 lakh HRA, 80C, NPS, home-loan interest

With ₹3 lakh HRA exemption, ₹1.5 lakh 80C, ₹50,000 NPS, ₹2 lakh home-loan interest and ₹25,000 other deductions: old ₹59,800.00 vs new ₹97,500.00.

Rule of thumb

The old regime tends to win only when your total deductions and exemptions are large relative to income. The only way to be sure is to run both, which the calculator does in one step.

What this does not cover

Capital gains, business income, TDS credits and interest on late payment are outside the model. Verify with Form 16 and the Income Tax Department’s portal.

Practice questions

Test yourself, then tap to check. Answers are calculated by the tools linked below.

  1. Salaried, ₹18 lakh gross, no deductions. Which regime is better and what is the tax?
    Show answer

    Better regime for you: New regime — saves ₹2,00,200.00 · Tax under the new regime: ₹1,50,800.00 · Tax under the old regime: ₹3,51,000.00

  2. ₹75 lakh home loan at 8.6% for 30 years, 0.5% fee. What is the EMI and total interest?
    Show answer

    Monthly EMI: ₹58,200.88 · Total interest payable: ₹1,34,52,316.30

  3. ₹1 lakh a year for 15 years at 7.1% (lump sum before 5 April). What is the maturity value?
    Show answer

    Maturity value: ₹27,12,139.48 · Total interest earned (tax-free): ₹12,12,139.48

Frequently asked questions

Which regime is better for a ₹15 lakh salary?

It depends on deductions; with few deductions the new regime is usually cheaper, with large ones the old regime can win. Enter your own numbers.

Can I switch regimes every year?

Salaried individuals can generally choose each year; people with business income have restrictions. Check the rules.

Is income up to ₹12 lakh really tax-free?

Under the new regime, taxable income up to ₹12 lakh gets a full rebate for resident individuals, excluding special-rate income.

Is the old regime rebate a cliff?

Yes. Above ₹5 lakh taxable income there is no marginal relief under the old regime.

Try it yourself

Income Tax Calculator India (New vs Old Regime)Compare tax under the new and old regimes for FY 2026-27, with rebate, standard deduction, surcharge and cess.Home Loan EMI CalculatorCalculate your home loan EMI, total interest, processing fee, prepayment savings and how much loan your income can support.PPF CalculatorEstimate your Public Provident Fund maturity value with yearly or monthly deposits, tax-free interest and a yearly table.

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Reviewed by Thomas M, Registered Investment Adviser (South Carolina), who launched his own financial advisory firm in 2010. Spot a mistake? Tell us. See our editorial policy. Finance content is educational and not financial advice; see the disclaimer.