Old vs New Tax Regime 2026-27: The Break-Even Deduction Table

For most salaried people the new tax regime is better in Tax Year 2026-27. The old regime comes out ahead only when your deductions beyond its ₹50,000 standard deduction (HRA exemption, 80C, 80D, home-loan interest, your own NPS and the like) add up to more than a break-even amount. That amount is about ₹5.44 lakh on a ₹15 lakh salary, ₹6.42 lakh on ₹18 lakh, ₹7.08 lakh on ₹20 lakh and a flat ₹8 lakh from about ₹25 lakh up to ₹50 lakh. At ₹12.75 lakh or less, the new regime's tax is zero, so the old regime can only tie.

The table below is the useful part: find your salary, add up your deductions, and you know the answer before you open the income tax calculator to confirm it. Every figure was worked out with that calculator's own code.

The break-even table for 2026-27

How we built it: for each salary we entered a salaried resident below 60, set every deduction to zero, and then raised a single "other deductions" figure until the old regime's tax exactly matched the new regime's. That figure is the break-even.

All taxes include 4% cess. "Gross salary" is your salary before the standard deduction, including HRA and any employer NPS contribution.

How to read the table

Step 1: add up your old-regime deductions. Count everything the old regime allows beyond the standard deduction:

• HRA exemption, worked out with the HRA calculator (only if you pay rent).
• 80C, up to ₹1.5 lakh in total. Your own EPF contribution counts here, so many people fill much of it without trying.
• 80D health insurance: up to ₹25,000 for your family, plus up to ₹25,000 for parents (₹50,000 if they are 60 or older).
• Your own NPS contribution under 80CCD(1B), up to ₹50,000.
• Interest on a home loan for the house you live in, up to ₹2 lakh.
• Professional tax (usually ₹2,500 a year), education-loan interest, eligible donations.

Step 2: compare with your row. Above the break-even, the old regime saves tax; below it, the new regime does. Between two rows, the break-even sits between the two figures.

Step 3: see how much is at stake. Near the break-even the difference is small. On a ₹15 lakh salary, every ₹10,000 of deductions above the break-even saves ₹2,080 in the old regime; on ₹18 lakh and above it saves ₹3,120, because the extra deductions come off income taxed at 30% plus cess.

Why the figure stops at ₹8 lakh

Once your income is in the 30% slab in both regimes (from about ₹24.75 lakh of salary), each extra rupee you earn is taxed at the same 30% either way. The gap between the regimes stops growing, so the deductions needed to close it stay fixed at ₹8 lakh, until surcharge enters above ₹50 lakh.

Why low salaries need so much

Up to ₹12.75 lakh the new regime charges nothing, so the old regime has to reach zero too. It only does that when taxable income falls to ₹5 lakh, where its own ₹12,500 rebate applies. Unlike the new regime, the old one has no marginal relief at that line: a ₹10 lakh earner who falls just ₹10,000 short of the ₹4.5 lakh break-even pays ₹15,080 in the old regime against nothing in the new. The requirement peaks at ₹7.25 lakh for a salary of exactly ₹12.75 lakh.

A reality check

Without HRA, the most a typical employee can claim is about ₹4.78 lakh: ₹1.5 lakh in 80C, ₹75,000 in 80D (self plus senior parents), ₹50,000 in NPS, ₹2 lakh of home-loan interest and ₹2,500 of professional tax. That is below the break-even for every salary from ₹15 lakh up. In practice, the old regime only wins if you also have a large HRA exemption, which requires paying rent.

Worked examples

Example 1: ₹18 lakh in Bengaluru, paying ₹30,000 rent

Priya earns ₹18 lakh. Her basic is ₹60,000 a month and her HRA ₹30,000 a month. She pays ₹30,000 rent, invests ₹1.5 lakh under 80C (EPF plus ELSS), pays ₹25,000 for family health insurance and ₹2,500 professional tax in Karnataka.

1. HRA exemption: the least of HRA received (₹3,60,000), rent minus 10% of basic (₹3,60,000 − ₹72,000 = ₹2,88,000) and 50% of basic (₹3,60,000; Bengaluru is a 50% city from 2026-27). Exempt HRA: ₹2,88,000.
2. Total deductions beyond ₹50,000: ₹2,88,000 + ₹1,50,000 + ₹25,000 + ₹2,500 = ₹4,65,500.
3. Break-even at ₹18 lakh: ₹6,41,667. She is ₹1,76,167 short.
4. Old regime: taxable ₹12,84,500, tax ₹2,05,764. New regime: tax ₹1,50,800.

Result: the new regime saves her ₹54,964. Even adding ₹50,000 of NPS and ₹50,000 of parents' insurance would leave her short.

Example 2: ₹12 lakh in Pune

Rahul earns ₹12 lakh with a basic of ₹40,000 a month and HRA of ₹20,000 a month. He pays ₹18,000 rent, invests ₹1.5 lakh under 80C, pays ₹25,000 in 80D and ₹2,500 in professional tax.

1. HRA exemption: rent minus 10% of basic is ₹2,16,000 − ₹48,000 = ₹1,68,000, the lowest of the three.
2. Deductions beyond ₹50,000: ₹1,68,000 + ₹1,50,000 + ₹25,000 + ₹2,500 = ₹3,45,500.
3. Old regime: taxable ₹8,04,500, tax ₹76,336. New regime: ₹0.

Result: the new regime saves ₹76,336. To match it, Rahul would need ₹6.5 lakh of deductions. Anyone earning up to ₹12.75 lakh should simply stay in the new regime.

Example 3: ₹30 lakh with a home loan

Anita earns ₹30 lakh and lives in her own flat. She pays more than ₹2 lakh a year in home-loan interest (₹2 lakh is the limit), fills 80C with EPF and loan principal, pays ₹25,000 for her family's health cover and ₹50,000 for her senior-citizen parents, puts ₹50,000 into NPS and pays ₹2,500 professional tax.

1. Deductions beyond ₹50,000: ₹2,00,000 + ₹1,50,000 + ₹25,000 + ₹50,000 + ₹50,000 + ₹2,500 = ₹4,77,500.
2. Break-even at ₹30 lakh: ₹8,00,000. She is ₹3,22,500 short.
3. Old regime: taxable ₹24,72,500, tax ₹5,76,420. New regime: ₹4,75,800.

Result: the new regime saves ₹1,00,620, even though she loses the home-loan interest deduction. A home loan alone rarely justifies the old regime. If you are weighing a prepayment instead, our guide to calculating EMI with prepayment and the EMI calculator show what it saves.

Example 4: when the old regime still wins

Karan earns ₹15 lakh in Mumbai with a basic of ₹50,000 a month and HRA of ₹25,000 a month, and pays ₹35,000 rent. His exempt HRA is the full ₹3,00,000. He also claims ₹1.5 lakh in 80C, ₹25,000 for his family's insurance, ₹50,000 for his senior parents' insurance, ₹50,000 in NPS and ₹2,500 professional tax: ₹5,77,500 in all, above the ₹5,43,750 break-even.

Old regime tax: ₹90,480. New regime: ₹97,500. The old regime saves ₹7,020. But look at what it rests on. If Karan drops the ₹50,000 NPS contribution, his deductions fall to ₹5,27,500, old-regime tax rises to ₹1,00,880 and the new regime wins by ₹3,380. The old regime pays off only when the deductions are things you would spend on anyway.

What moves the break-even

• Employer NPS. The new regime allows your employer's NPS contribution up to 14% of basic; for a private employer the old regime allows only 10%. If your employer contributes, the new regime gets a little better.
• Age. The old regime has a higher tax-free limit for those aged 60 and above, which lowers the break-even for senior citizens. Check your own numbers in the calculator.
• Other income such as interest is taxed in both regimes and shifts the row you should read.

Who can switch regimes, and when

Salaried people and pensioners (no business or professional income) can choose either regime every year. Under section 202 of the Income-tax Act, 2025, the choice is made in the return itself. What you tell your employer in April only decides monthly TDS; if you pick differently in the return, the difference comes back as a refund or is paid as extra tax.

One condition matters: the option has to be exercised in a return filed by the due date. If you file late, you are taxed under the new regime, which is the default.

People with business or professional income (including many freelancers) have a stricter rule. To use the old regime they must opt out of the new regime by the return due date, and that choice continues in later years. They can withdraw it, returning to the new regime, only once. After that they cannot choose the old regime again unless they stop having business income.

The figures here are general information based on October 2026 rules, not tax advice; check your own salary structure before deciding.

Frequently asked questions

Which regime is better for a ₹10 lakh salary?

The new regime, which charges ₹0 on a ₹10 lakh salary. The old regime would need ₹4.5 lakh of deductions beyond its standard deduction just to match it.

Can I switch from the new regime to the old regime every year?

Yes, if you have no business or professional income. You choose in each year's return, filed by the due date. Business owners can switch back only once.

Is HRA exemption allowed in the new regime?

No. HRA is fully taxable in the new regime. That is why HRA is often the deciding factor; our HRA exemption guide shows how to work it out.

I told my employer "new regime". Can I still file under the old one?

Yes. The declaration to your employer only sets TDS. Choose the old regime in your return, claim your deductions with proof kept ready, and any excess TDS is refunded.

Does the 87A rebate apply in the old regime?

Yes, but it is smaller: up to ₹12,500 when taxable income is ₹5 lakh or less, with no marginal relief above that. The new regime's rebate goes up to ₹60,000 on taxable income of ₹12 lakh. See new tax regime slabs with examples.

Sources: Income-tax Act, 2025 (sections 19, 22, 123, 124, 126, 156 and 202); Income-tax Rules, 2026 (Rule 279); Income Tax e-filing portal guidance on choosing a tax regime. Rules as of October 2026.