Tax regimes, slabs and rates · Tax Year 2026-27
Old vs new tax regime: which should you choose?
The new regime has lower rates and a higher rebate but allows very few deductions. The old regime has higher rates but lets you claim deductions like 80C, 80D and home loan interest. Compare slabs, deductions and examples.
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Choose the new regime if you have few deductions. Its slabs are lower and the rebate means no tax up to ₹12 lakh of taxable income. Choose the old regime if your deductions (80C, 80D, home loan interest and others) are large enough to bring your tax below the new regime's tax. The only way to know is to calculate both.
The figures below are the rates carried forward for the tax year 2026-27. They are provisional: they repeat the tax year 2025-26 values (Finance Act 2025) and have not yet been signed off against the Income-tax Act, 2025 or the Finance Act 2026.
Slabs side by side
Income slab | Old regime (below 60) | New regime |
|---|---|---|
Up to ₹2,50,000 | Nil | Nil |
₹2,50,001 to ₹4,00,000 | 5% | Nil |
₹4,00,001 to ₹5,00,000 | 5% | 5% |
₹5,00,001 to ₹8,00,000 | 20% | 5% |
₹8,00,001 to ₹10,00,000 | 20% | 10% |
₹10,00,001 to ₹12,00,000 | 30% | 10% |
₹12,00,001 to ₹16,00,000 | 30% | 15% |
₹16,00,001 to ₹20,00,000 | 30% | 20% |
₹20,00,001 to ₹24,00,000 | 30% | 25% |
Above ₹24,00,000 | 30% | 30% |
In the old regime, senior citizens (60 to 79) have a basic exemption of ₹3,00,000 and super senior citizens (80 and above) have ₹5,00,000. Health and education cess of 4% is added to the tax in both regimes.
Rebate, standard deduction and surcharge
Feature | Old regime | New regime |
|---|---|---|
Rebate (section 87A of the 1961 Act) | Up to ₹12,500 if total income is ₹5,00,000 or less | Up to ₹60,000 if total income is ₹12,00,000 or less, with marginal relief just above |
Standard deduction for salary or pension | ₹50,000 | ₹75,000 |
Highest surcharge rate | 37% (above ₹5 crore) | 25% (above ₹2 crore) |
Family pension deduction | Lower of one-third and ₹15,000 | Lower of one-third and ₹25,000 |
Under the Income-tax Act, 2025 the rebate is in section 156: up to ₹12,500 where total income is ₹5,00,000 or less, and, for a person taxed under the new regime (section 202(1)), up to ₹60,000 where total income is ₹12,00,000 or less, with marginal relief above that.
The new regime rebate covers tax on normal slab income only. It does not cover tax on special-rate income such as capital gains.
What deductions you can still claim
Old regime: you can claim the standard deduction, Chapter VI-A deductions and set off house property loss. TaxCare models these:
- Section 80C, 80CCC and 80CCD(1) together: up to ₹1,50,000.
- Section 80CCD(1B), extra NPS: ₹50,000.
- Section 80D, health insurance: ₹25,000 for self and family (₹50,000 if a senior citizen is covered), and the same again for parents, up to ₹1,00,000 in total.
- Section 80TTA (savings interest): ₹10,000, or 80TTB for senior citizens: ₹50,000.
- Home loan interest on a self-occupied house: up to ₹2,00,000.
- Section 80E (education loan interest) and 80G (donations).
New regime: the main deductions are the standard deduction and the employer's contribution to your NPS account (up to 14% of salary). Most Chapter VI-A deductions, including 80C and 80D, are not allowed, and house property loss cannot be set off against other income.
Two worked examples
These are illustrations for a salaried person below 60 with no other income. Numbers are rounded to the rupee and come from TaxCare's tax engine.
Example 1: salary of ₹10,00,000, deductions of ₹1,50,000 under 80C
- New regime: taxable income is ₹10,00,000 − ₹75,000 = ₹9,25,000. The slab tax is ₹32,500, and the rebate removes it. Tax: ₹0.
- Old regime: taxable income is ₹10,00,000 − ₹50,000 − ₹1,50,000 = ₹8,00,000. Slab tax is ₹72,500. No rebate, since income is above ₹5,00,000. With 4% cess, tax: ₹75,400.
Example 2: salary of ₹14,00,000, deductions of ₹1,50,000 under 80C
- New regime: taxable income is ₹13,25,000. Slab tax is ₹78,750. With 4% cess, tax: ₹81,900.
- Old regime: taxable income is ₹12,00,000. Slab tax is ₹1,72,500. With 4% cess, tax: ₹1,79,400.
In both examples the new regime is lower. The old regime tends to win only when deductions are large, for example when you also have a big home loan interest claim, health insurance and NPS. Run your own numbers to be sure.
Can you switch?
For a salaried person, the regime is chosen in the return, so you can compare each year. A belated return cannot use the old regime in TaxCare's rules, so file on time if you want the old regime.
Under the Income-tax Act, 2025 the new regime (section 202) is the default. The old regime applies only if you opt out:
- No business or profession income: you opt out in the return filed by the due date, for that tax year only, so the choice can differ from year to year.
- Business or profession income: you opt out on or before the due date, and the choice then carries on to later years. It can be withdrawn only once. After that you cannot opt out again, unless you stop having business or profession income.
How TaxCare helps
TaxCare calculates your tax under both regimes from your own data and shows the difference before you decide. It brings in your salary, TDS and other income from the portal, so you do not need to key them in. The choice is always yours, and nothing is submitted until you approve the return.
This guide gives general information and is not professional tax advice.
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