Quick Answer: Which Tax Regime Saves You More Money?
Under rules for FY 2026-27, salaried individuals benefit from a ₹75000 standard deduction and Section 87A rebate under the New Tax Regime. For the Old Tax Regime to match or beat the New Regime, your total deductions—including Section 80C, Section 80D, HRA (Section 10(13A)), and home loan interest (Section 24(b))—must exceed the breakeven deduction threshold for your income bracket. Check the current slabs on the Income Tax Department website. Compare both regimes on your exact salary with our free [Income Tax Calculator](/income-tax-calculator).
The New Tax Regime Structure for FY 2026-27
The New Tax Regime (Section 115BAC) operates with the following parameters for FY 2026-27: 1. Standard Deduction: ₹75000 for salaried employees and pensioners. 2. Slabs: Slabs are structured progressively; check the current slabs on the Income Tax Department website before filing. 3. Section 87A Rebate: Full rebate is provided on eligible taxable income up to ₹700000.
What You Give Up in the New Tax Regime
While the New Regime offers lower slab rates, it disallows several individual exemptions: • House Rent Allowance (Section 10(13A)): Disallowed. • Section 80C (PPF, EPF, ELSS, Life Insurance): Disallowed. • Section 80D (Health Insurance Premiums): Disallowed. • Section 24(b) (Home loan interest on self-occupied house): Disallowed. • Section 80CCD(1B) (NPS extra ₹50k deduction): Disallowed. Deductions allowed under the New Regime: Standard deduction (₹75000), employer NPS contribution under Section 80CCD(2), and statutory exemptions on gratuity (Section 10(10)).
The Breakeven Evaluation by Salary Level
To decide between the two regimes: • If your total eligible deductions are modest, the New Tax Regime is simpler and usually yields lower tax liability. • If you pay substantial rent (claiming [HRA](/hra-calculator)) and repay a home loan while maximizing Section 80C and Section 80D, calculate your breakeven point carefully. • Check the current slabs on the Income Tax Department website or run our [Income Tax Calculator](/income-tax-calculator) to see your exact tax under both regimes.