Income Tax Slabs 2026-27 — New vs Old Regime Comparison
Table of Contents
Every February, my Karol Bagh office fills with salaried employees asking which regime to choose. After analyzing 1,000+ returns, the answer depends on deductions. Use our free Income Tax Calculator to compare.
New Tax Regime — FY 2026-27 (AY 2027-28)
The new tax regime (Section 115BAC) has been the default regime since FY 2023-24. It offers lower tax rates but fewer deductions and exemptions. The budget has progressively increased the rebate limits and adjusted slabs.
| Income Slab (₹) | Tax Rate |
|---|---|
| 0 – 4,00,000 | Nil |
| 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% |
- Standard deduction: ₹75,000 (salaried & pensioners)
- Rebate u/s 87A: Up to ₹60,000 (effective tax-free income up to ₹12 lakh for salaried)
- Surcharge: 10% above ₹50L, 15% above ₹1Cr, 25% above ₹2Cr
- Cess: 4% Health & Education Cess on tax + surcharge
Old Tax Regime — FY 2026-27
The old regime allows all traditional deductions and exemptions. It benefits taxpayers who have significant investments under Section 80C, home loan interest, HRA, and other deductions.
| Income Slab (₹) | Tax Rate |
|---|---|
| 0 – 2,50,000 | Nil |
| 2,50,001 – 5,00,000 | 5% |
| 5,00,001 – 10,00,000 | 20% |
| Above 10,00,000 | 30% |
- Section 80C: Up to ₹1.5 lakh (PPF, ELSS, LIC, NPS, home loan principal)
- Section 80D: Up to ₹25,000 (₹50,000 for senior citizens) medical insurance
- HRA exemption: For salaried staying in rented accommodation
- Section 24(b): Up to ₹2 lakh home loan interest
- Standard deduction: ₹50,000
- Rebate u/s 87A: Up to ₹12,500 (tax-free up to ₹5 lakh)
Side-by-Side Comparison
| Feature | New Regime | Old Regime |
|---|---|---|
| Basic exemption | ₹4,00,000 | ₹2,50,000 |
| Standard deduction | ₹75,000 | ₹50,000 |
| Section 80C | Not available | Up to ₹1.5L |
| HRA exemption | Not available | Available |
| Home loan interest | Not available | Up to ₹2L u/s 24(b) |
| LTA | Not available | Available |
| Rebate 87A | Up to ₹60,000 | Up to ₹12,500 |
| Default regime | Yes (default) | Must opt-in |
Tax Calculation Examples
Example 1: Salaried, ₹10 lakh income, minimal deductions
| New Regime | Old Regime | |
|---|---|---|
| Gross income | ₹10,00,000 | ₹10,00,000 |
| Standard deduction | ₹75,000 | ₹50,000 |
| Sec 80C | — | ₹1,00,000 |
| Taxable income | ₹9,25,000 | ₹8,50,000 |
| Tax | ₹40,000 | ₹72,500 |
| After rebate | ₹0 | ₹60,000 |
Winner: New Regime — saves ₹60,000 thanks to the 87A rebate.
Example 2: Salaried, ₹15 lakh income, full deductions
| New Regime | Old Regime | |
|---|---|---|
| Gross income | ₹15,00,000 | ₹15,00,000 |
| Standard deduction | ₹75,000 | ₹50,000 |
| Sec 80C + 80D + HRA + 24b | — | ₹4,50,000 |
| Taxable income | ₹14,25,000 | ₹10,00,000 |
| Tax | ₹1,43,750 | ₹1,17,000 |
| Tax + 4% cess | ₹1,49,500 | ₹1,21,680 |
Winner: Old Regime — saves ₹27,820 when you have substantial deductions.
How to Choose the Right Regime
- Choose New Regime if: Income below ₹12L (salaried), minimal investments, want simplicity
- Choose Old Regime if: You claim ₹2.5L+ in deductions (80C + 80D + HRA + home loan), income above ₹15L with full deductions
- Use our Income Tax Calculator to compare both regimes with your actual income and deductions