Old vs New Tax Regime: Slabs, Breakeven and How I'd Decide

The Two Regimes at a Glance

New Tax Regime (FY 2026-27 / AY 2027-28 slabs, introduced by Budget 2025 and retained by Budget 2026), applied to taxable income after the standard deduction of ₹75,000 for salaried employees:

New regime rebate: Under Section 87A, if taxable income is ₹12 lakh or below, the entire tax liability is nil (₹60,000 rebate). This means with standard deduction of ₹75,000 (new regime), gross salary up to ₹12.75 lakh results in zero tax. Add cess (4%) on any tax that survives the rebate.

Marginal relief just above ₹12 lakh: do not skip this. The rebate does not stop dead at ₹12 lakh. Just above it, marginal relief caps the income-tax at the amount by which taxable income exceeds ₹12 lakh, and the full slab tax only takes over from about ₹12,70,588 of taxable income. There is no cliff here; the ₹12 lakh threshold section below works through the numbers.

Standard deduction in new regime: ₹75,000 (raised from ₹50,000 by Budget 2024, and unchanged in every Budget since). The old regime stays at ₹50,000.

Old Tax Regime (unchanged for many years):

Old regime rebate: Under Section 87A, if taxable income (after all deductions) is ₹5 lakh or below, tax is nil.

Old regime advantage: Access to all deductions: Section 80C (₹1.5 lakh), HRA exemption, 80D (health insurance), 80CCD(1B) (NPS top-up ₹50,000), Section 24(b) (home loan interest ₹2 lakh), and others. These can significantly reduce taxable income.

The old regime's 30% slab kicks in at ₹10 lakh, compared to 15% at ₹12 lakh under the new regime. This difference, combined with the deduction value at 30%, determines which regime is more efficient for a given profile.

How Slabs Work: Marginal vs Effective Rate

India's income tax system is progressive and marginal. "Progressive" means higher incomes face higher rates. "Marginal" means those higher rates apply only to income above each threshold, not to all income. So every taxpayer has two rates: the marginal rate, which is the rate on your last rupee, and the effective rate, which is total tax divided by total income and is always lower than your top slab.

A Worked Example: ₹16 Lakh Taxable Income (New Regime)

If your taxable income after standard deduction is ₹16,00,000:

Plus 4% cess: ₹4,800. Total tax: ₹1,24,800.

Marginal rate: 15% (the slab your last rupee fell into). Effective rate: ₹1,24,800 ÷ ₹16,00,000 = 7.8%.

You are legally in the "15% slab" but you pay an average of 7.8% on your total income. These are different numbers answering different questions.

The Slab Myth

A common version: "If I earn ₹1 more and cross into the next slab, my whole salary gets taxed at the higher rate and I take home less."

This is wrong. Only the rupees above each slab threshold are taxed at the higher rate. The income below each threshold remains taxed at the original rates. Crossing a slab threshold is never financially harmful: it means more income, and only the marginal rupees face the higher rate. Understanding both rates clearly lets you evaluate the tax impact of each financial decision, rather than avoiding income or deferring productive choices out of a misread of how the system works.

The ₹12 Lakh Threshold: A Kink, Not a Cliff

There is one genuine threshold effect in India's slabs: the Section 87A rebate, the one place in the new regime where the smooth slab arithmetic bends. It is widely described as a cliff: cross ₹12 lakh of taxable income by a single rupee and a ₹60,000-odd bill supposedly lands on you. That is not what the law says. The ₹12 lakh ceiling arrived with Finance Act 2025 and now sits in section 156(2) of the Income-tax Act, 2025 (the provision readers still know as Section 87A), which carries a marginal relief clause, section 156(2)(b), alongside the rebate itself. Finance Act 2026 left both untouched, so the drop is cushioned.

The rule in plain words: once taxable income crosses ₹12 lakh, your income-tax is capped at whatever you earned above ₹12 lakh. The statute rebates the difference between the slab tax and that excess. To apply it, compute the plain slab tax first, compare it with (income − ₹12,00,000), and pay the lower of the two before adding cess.

Worked example: ₹12,10,000 taxable income

What the cliff story predicts, the raw slab tax:

₹61,500 plus 4% cess (₹2,460) = ₹63,960.

What you actually pay:

• Income above the threshold: ₹12,10,000 − ₹12,00,000 = ₹10,000
• The slab tax of ₹61,500 exceeds that ₹10,000, so marginal relief rebates the difference: ₹61,500 − ₹10,000 = ₹51,500
• Income-tax payable: ₹10,000
• 4% cess on ₹10,000: ₹400
• Total: ₹10,400

Earning ₹10,000 past the threshold costs ₹10,400, not ₹63,960.

Where the relief runs out

Relief only bites while the slab tax is bigger than the excess. Above ₹12 lakh the slab tax is ₹60,000 plus 15% of the excess, so the two meet where 60,000 + 0.15E = E, an excess of ₹70,588. Past roughly ₹12,70,588 of taxable income the ordinary slab tax is already the smaller number and marginal relief has nothing left to do.

What this means in practice:

For a salaried employee with gross salary around ₹13 lakh:

• Gross salary ₹13,00,000 − ₹75,000 standard deduction = ₹12,25,000 taxable
• Slab tax ₹63,750; excess over ₹12 lakh ₹25,000; marginal relief ₹38,750
• Tax: ₹25,000 + 4% cess = ₹26,000

Versus someone earning ₹12,75,000 gross:

• ₹12,75,000 − ₹75,000 = ₹12,00,000 taxable
• 87A rebate applies: ₹0 tax

So the ₹25,000 of extra salary costs ₹26,000 in tax and leaves the higher earner ₹1,000 behind, not the ₹66,300 a cliff reading of the slabs would predict.

The residual effect: real, but small

Inside the relief band every extra rupee of income is matched by a rupee of income-tax, plus 4 paise of cess (there is no marginal relief on cess). Take-home pay is therefore flat from ₹12 lakh to about ₹12.7 lakh of taxable income, drifting down by the cess alone. The worst case is a shortfall of roughly ₹2,824, and you are back ahead of your ₹12 lakh take-home by around ₹12,73,900 of taxable income.

That is the honest version: the ₹12 lakh mark is a genuine kink, a stretch where a raise buys you nothing, but it is a ₹2,800 speed bump, not a ₹62,400 cliff.

One carve-out worth knowing: the rebate and its marginal relief apply only to income taxed at slab rates. Income charged at special rates (equity capital gains under Sections 111A and 112A, for instance) is set aside first: it sits outside the rebate entirely, and the tax on it is payable regardless.

Planning around the kink: because each rupee in the ₹12,00,000–₹12,70,588 band effectively costs ₹1.04 in tax, shaving taxable income back to ₹12 lakh is unusually valuable. It is one of the few stretches of the income scale where a rupee of deduction is worth more than a rupee (the surcharge thresholds, which carry their own marginal relief, behave the same way). If your taxable income sits in that band under the new regime, consider whether employer NPS contribution under 80CCD(2), which remains available in the new regime, can bring it to ₹12 lakh or below (NPS for salaried employees explains how that contribution is set up). On ₹12.5 lakh taxable, a ₹50,000 employer NPS contribution takes you to ₹12 lakh: zero tax instead of ₹52,000. Above roughly ₹12.7 lakh the effect fades and ordinary marginal-rate thinking takes over again.

Surcharge and Cess

For incomes above ₹50 lakh, a surcharge applies: 10% between ₹50 lakh and ₹1 crore, 15% between ₹1 crore and ₹2 crore, and 25% above ₹2 crore under the new regime. The old regime runs one step further, to 37% above ₹5 crore; the new regime caps out at 25%. Marginal relief applies at each surcharge threshold too, so crossing one never costs more than the income that took you across it. This surcharge is applied to the computed tax, not to income directly.

A 4% health and education cess applies to all taxpayers on the total income tax (including surcharge). When calculating effective rates, always include cess in the numerator.

The Effective Rate Across Income Levels (New Regime, FY 2026-27)

Here's what effective rates actually look like, after standard deduction of ₹75,000:

The effective rate climbs slowly, reflecting how the marginal rate only applies to income in each slab. Even at ₹30 lakh gross salary, the effective rate is ~16%, not the 30% marginal rate. This is the core insight that separates informed tax thinking from the slab confusion most people carry.

Effective Rate vs Marginal Rate: Which to Use When

Use effective rate to understand your total tax burden for a year: how much of your total income went to taxes. Useful for year-on-year comparison and overall budget planning.

Use marginal rate to evaluate any specific financial decision: a new income source, a deduction, a withdrawal, a timing choice. Your marginal rate is the rate that applies to each additional rupee (from a bonus, freelance income, rental income, or investment returns), and it is also the rate at which deductions save you money. Every rupee-at-the-margin decision is evaluated at the marginal rate, not the effective rate.

The two are frequently confused because they both use the phrase "tax rate." They answer different questions:

• Effective rate answers: "What fraction of my total income was paid in tax this year?"
• Marginal rate answers: "What will this specific decision cost me in tax?"

That is also why the effective rate is the number that communicates your actual burden when you discuss your tax situation with a CA, employer, or family member. "My marginal rate is 30%" tells you the rate on the last rupee; "My effective rate is 11%" tells you what fraction of total income went to tax. Both numbers are correct and useful for different conversations, and understanding which one to use, and why they differ, is part of becoming financially literate about your own tax situation.

Multi-Year Marginal Rate Planning

Your marginal rate today may not be your marginal rate in 5 years. A freelance project, rental receipt, or capital gain realised in a year when your income is lower is taxed at a lower marginal rate, so timing discretionary income events toward lower-income years can reduce lifetime tax meaningfully. Recognising this opens planning opportunities:

Pre-retirement: Income often peaks in the last 10 years of a career. Deferring taxable events (NPS withdrawal, property sale, large capital gains realisation) to retirement years when income is lower can materially reduce lifetime tax.

High-income year: A large one-time payment (ESOP vesting, bonus, property sale) in a single year can push you into the 30% slab temporarily. If you have flexibility in timing the receipt, spreading it across two financial years avoids the slab concentration. Note: this only applies where you really can choose when the money is received; not all income can be deferred.

Variable income earners (freelancers, consultants): A project delivered in March vs April falls in different financial years and different income totals. Advance planning of invoice timing (within the legitimate scope of when work is delivered) can smooth income across years and keep both years in lower slabs rather than having one high year and one low year.

Marginal Rate Thinking for Investment Withdrawals

When you withdraw from a corpus (an NPS partial withdrawal, EPF withdrawal, ELSS redemption or bank FD maturity), the marginal rate at the time of withdrawal determines the tax cost.

NPS partial withdrawal: 25% of employee contribution can be withdrawn tax-free for specific purposes (children's education, critical illness, marriage). Balance at final withdrawal: up to 60% of the corpus is tax-free; at least 20% (40% for government employees) must purchase an annuity (annuity income is taxable at slab rate in the year of receipt), and any lump sum above 60% is taxed at your marginal rate.

EPF withdrawal before 5 years: Taxed as salary income in the year of withdrawal, at your marginal rate for that year. If you withdraw ₹5 lakh from EPF in a high-income year when you're at 30%, the tax cost is ₹1.5 lakh + cess. If you withdraw in a low-income year (career gap, sabbatical), the same ₹5 lakh may be taxed at 5% or even 0%.

Timing matters for all taxable withdrawals. The decision of when to take out money from a tax-deferred account is as important as the investment decision itself.

What You Give Up in the New Regime

Switching to the new regime means you cannot claim:

• Section 80C deductions (EPF, ELSS, PPF, life insurance, school fees, home loan principal)
• Section 80D (health insurance premiums)
• Section 80CCD(1B) (NPS additional ₹50,000)
• Section 24(b) home loan interest on self-occupied property
• HRA exemption
• LTA (Leave Travel Allowance) exemption
• Professional tax deduction
• Most allowance exemptions (only a few, like NPS contribution by employer, remain)

You retain:

• Standard deduction (₹75,000 in new regime vs ₹50,000 in old)
• Section 80CCD(2): the employer's contribution to NPS (if your employer contributes)
• Gratuity exemption
• EPF corpus exemption on maturity
• Agricultural income exemption

Key Deductions That Shift the Calculation

When comparing regimes, these deductions have the most outsized impact (the income tax deductions guide covers each one's limits and paperwork):

Home loan interest (Section 24(b)): ₹2,00,000 deduction. At 30% rate = ₹60,000 + cess = ~₹62,400 saving. This single deduction often tilts the calculation toward old regime for those who have it.

HRA exemption: Variable but potentially ₹1–3 lakh for metro renters with high rent relative to basic salary. Can be very large.

Parents' health insurance (Section 80D, senior citizens): Up to ₹50,000. If your parents are senior citizens and you pay their insurance, this ₹50,000 deduction saves ₹15,000 at 30%, which is meaningful and often overlooked in regime calculations.

What a deduction is worth depends on your marginal rate. Every rupee of deduction saves money equal to your marginal rate. 80C, 80D and Section 24(b) are all old-regime deductions, so the only rates that can apply to them are the old regime's own ladder: 5%, 20% and 30%. That ladder contains no 10% band: the 10% rate belongs to the new regime's ₹8–12 lakh slab, where 80C cannot be claimed at all, so a "10% saving on 80C" is not a combination the law allows.

A ₹1.5 lakh ELSS investment saves ₹7,500 at 5% and ₹45,000 at 30%: deductions are worth six times more at 30% than at 5%. That is why regime choice is income-sensitive, and why taxpayers in the 30% slab (those with taxable income above ₹10 lakh under the old regime) benefit most from systematic 80C, 80D, HRA, and NPS utilisation.

These deductions are worth less at lower marginal rates. At the 5% end of that ladder the old regime barely pays for itself. Someone with ₹4–8 lakh of taxable income owes nothing at all under the new regime once the Section 87A rebate is applied, so the effort of maintaining investment proofs, tracking deduction limits, and staying on the old regime for a few thousand rupees of deduction value is hard to justify. The new regime's simplicity has real value, and at low income levels it tips the choice toward the new regime.

The core rule: Both regimes give a salaried employee a standard deduction (₹75,000 under the new regime, ₹50,000 under the old), so the hurdle is not ₹75,000 of deductions but that ₹25,000 gap plus enough 80C, 80D, HRA, NPS and home loan interest to outweigh the new regime's lower rates. Old regime is worth maintaining when your deductions above that gap generate more tax saving at your marginal rate than the rate advantage of the new regime slabs. A simple breakeven calculation compares tax liability under each regime for your specific income and deductions.

The Breakeven Deductions Calculation

The key question is: at what level of deductions does the old regime equal the new regime in tax? Below this level, new regime is better. Above it, old regime is better.

The breakeven differs by income level. Here's a framework:

For annual income of ₹10 lakh:

New regime: income ₹10L − standard deduction ₹75K = taxable income ₹9,25,000. Because this is below ₹12,00,000, the Section 87A rebate makes the tax nil, so the new-regime tax is ₹0.

Old regime: income ₹10L − standard deduction ₹50K = ₹9,50,000, less your deductions. With ₹2,00,000 of deductions (80C + 80D): taxable = ₹7,50,000. Tax: Nil on ₹2.5L + 5% on ₹2.5L (₹12,500) + 20% on ₹2.5L (₹50,000) = ₹62,500. Plus 4% cess = ₹65,000.

To make the old regime also nil, you would need to push taxable income down to ₹5,00,000 (the old-regime 87A limit), which takes roughly ₹4,50,000 of deductions on a ₹10 lakh salary.

At ₹10 lakh income the new regime is already zero tax thanks to the rebate, so the old regime can at best match it, and only with very large deductions. For almost everyone at this income, the new regime wins outright.

For annual income of ₹15 lakh:

New regime tax: income ₹15L − ₹75K = ₹14,25,000. Tax: Nil on ₹4L + 5% on ₹4L (₹20K) + 10% on ₹4L (₹40K) + 15% on ₹2,25,000 (₹33,750) = ₹93,750. Plus 4% cess = ₹97,500.

Old regime with ₹3.75L deductions: taxable = ₹15L − ₹50K standard − ₹3.75L = ₹10,75,000. Tax: Nil on ₹2.5L + 5% on ₹2.5L (₹12,500) + 20% on ₹5L (₹1,00,000) + 30% on ₹75K (₹22,500) = ₹1,35,000. Plus 4% cess = ₹1,40,400.

So at ₹15 lakh with ₹3.75 lakh of deductions, the new regime (₹97,500) still wins. The old regime only pulls ahead once deductions are large enough to bring taxable income well below ₹10 lakh.

Rough breakeven guide by income (salaried, FY 2026-27):

The old regime wins only when your deductions on top of its ₹50,000 standard deduction are larger than the amounts below. The figures come from this site's income tax calculator; employer NPS under 80CCD(2) is allowed in both regimes and is left out.

Once both regimes tax you at 30%, the threshold stays at about ₹8 lakh up to ₹50 lakh of income, where surcharge starts.

How I'd Make the Regime Call

This is the part that matters most to me, because it is where the choice either rests on your own numbers or on habit. The steps are simple. The discipline is in doing them with this year's figures instead of last year's habit.

Step 1: List the deductions you can prove under the old regime Add up:

• EPF employee contribution (automatically happening)
• Additional 80C investments you actually make
• HRA exemption calculated properly (the HRA exemption calculator runs the three-part test)
• Health insurance premium (yours + parents')
• Home loan interest (if applicable)
• NPS additional contribution (80CCD(1B))

I would count only what is already paid or certain to be paid. A deduction you plan to make in February is a guess, and a regime choice built on a guess is not a decision.

Step 2: Calculate tax under both regimes

New regime: Gross salary − ₹75,000 standard deduction = taxable income → apply new regime slabs.

Old regime: Gross salary − ₹50,000 standard deduction − all deductions calculated above = taxable income → apply old regime slabs.

Doing this for more than one earner in the family, or with HRA, capital gains and advance tax in the picture, takes longer than one run of a calculator. For that, I made the Income Tax Planner, my own Google Sheets template that works out both regimes line by line for up to four people and lays out the advance-tax instalments. It's ₹999 on Gumroad.

Step 3: Compare, then look at the cash The regime with lower tax is your better choice on paper.

If the difference is less than ₹5,000, the new regime's simplicity (no proofs, no deadlines, no investment requirements) may be worth the small extra cost.

Before settling, I would add one check the slab tables do not show. The old regime rewards you only after you have put cash into something: a premium, an ELSS instalment, a PPF deposit. In business I learned to stop reading profit on paper as cash in hand, and a tax saving deserves the same care. If the old regime wins only because of payments you would not otherwise make, weigh the lock-in and the product's own return against the tax saved. The new regime's lower rates, with nothing locked away, may be the better deal.

When the Old Regime Can Win

The old regime only wins once your deductions clear the breakeven amount for your income. These are the situations that push them there:

• You have a home loan on a self-occupied property with interest above ₹1.5 lakh
• You receive significant HRA and pay substantial rent (especially in a metro)
• You're maximising 80C (₹1.5 lakh) and paying NPS (₹50,000 via 80CCD(1B))
• You're in the 30% tax bracket (taxable income above ₹10 lakh under old, ₹24 lakh under new)
• You have medical conditions requiring expensive health insurance for self or elderly parents

When New Regime Almost Certainly Wins

• You're a young earner below ₹12.75 lakh gross salary (likely zero tax under new regime)
• You have no home loan, don't claim HRA, and haven't been disciplined about 80C investments
• You value simplicity and don't want to track investment proofs and submission deadlines
• You prefer to make investment decisions based on returns rather than tax saving

Detailed Comparison: ₹12 Lakh Salary, Both Regimes

Take a software engineer in Pune on a ₹12 lakh gross salary. She pays rent, has a health insurance policy for herself and her parents, and has been contributing to ELSS.

Income profile:

• Gross salary: ₹12,00,000
• HRA received: ₹2,40,000; rent paid: ₹15,000/month (₹1,80,000/year)
• Basic salary: ₹6,00,000; city = non-metro (Pune)

HRA exemption calculation:

• Rule 1: ₹2,40,000 (actual HRA)
• Rule 2: ₹1,80,000 − 10% of ₹6,00,000 = ₹1,80,000 − ₹60,000 = ₹1,20,000
• Rule 3: 40% × ₹6,00,000 = ₹2,40,000
• HRA exempt: ₹1,20,000 (minimum)

Old Regime: Gross: ₹12,00,000 Less HRA exempt: ₹1,20,000 Less standard deduction: ₹50,000 Net salary: ₹10,30,000 Less 80C (EPF = 12% of ₹6L = ₹72,000; ELSS ₹78,000): ₹1,50,000 Less 80D (self ₹25,000 + parents ₹50,000, both senior citizens): ₹75,000 Less 80CCD(1B) NPS: ₹50,000 Taxable income: ₹10,30,000 − ₹2,75,000 = ₹7,55,000

Tax on ₹7,55,000:

• ₹0–2.5L: Nil
• ₹2.5–5L: 5% × ₹2.5L = ₹12,500
• ₹5–7.55L: 20% × ₹2.55L = ₹51,000
• Total: ₹63,500 + 4% cess = ₹66,040

New Regime: Gross: ₹12,00,000 Less standard deduction: ₹75,000 Taxable income: ₹11,25,000

Tax on ₹11,25,000: the slab tax works out to ₹52,500, but because taxable income is below ₹12,00,000, the Section 87A rebate wipes it out entirely. Her new-regime tax is ₹0.

Result: the new regime saves her the full ₹66,040. She pays zero tax even though she has significant deductions (80C, 80D, NPS, HRA).

Why? At a ₹12 lakh salary, the ₹75,000 standard deduction pulls taxable income under ₹12 lakh, so the 87A rebate makes the new-regime tax nil. The old regime still leaves ₹7,55,000 taxable and ₹66,040 of tax. To beat zero, the old regime would have to reach zero too, which means getting taxable income down to ₹5 lakh: roughly ₹2.55 lakh of deductions beyond what she already claims. That is rare at this income.

What if she also had a home loan with ₹2L annual interest?

Old regime: taxable = ₹7,55,000 − ₹2,00,000 = ₹5,55,000 → tax = ₹12,500 + 20% × ₹55,000 = ₹23,500 + cess = ₹24,440.

Even then, the new regime stays at ₹0, so it still wins, by ₹24,440. Below roughly ₹12.75 lakh gross salary, the 87A rebate makes the new regime nil, so extra deductions like home-loan interest cannot make the old regime cheaper than zero. They only start to matter once income climbs above that threshold.

Switching Regimes

Salaried individuals: Can switch once per year. Inform your employer at the beginning of the year (or when joining); the regime is reselected annually when declaring to the employer and again at ITR filing time. Even if you picked the wrong regime for TDS purposes, you can switch when filing your actual ITR, provided you file by the due date; a belated return is taxed under the new regime. The tax is squared up then.

Business owners (sole proprietors, partners in firms, consultants without employment) get no annual switching, and face a different rule:

• Opting out to the old regime: Done by filing Form 10-IEA on or before the ITR due date under Section 139(1)
• Coming back to the new regime: Allowed once, by filing Form 10-IEA again with the "re-enter" option
• After that re-entry: The old regime is closed to them permanently, unless they stop having business or professional income altogether

This asymmetry makes the decision far more consequential for entrepreneurs. A business owner who opts out to the old regime, then re-enters the new regime in a high-income year (thinking the lower rates help), cannot go back to the old regime later in a year when deductions become available. It is a one-way door, and the decision must be made with a multi-year perspective.

If I were deciding this as a proprietor, the one-way door is the part I would weigh longest. Business income moves with seasons and markets, so I would model at least two years, a strong one and a thin one, before using the single re-entry.

The best approach: Run the numbers every April. Your income and deductions change year to year, and what was right last year may not be right this year. The tax planning guide puts this April check inside a year-round calendar.

Impact of Employer Regime Declaration vs ITR Regime

When you inform your employer of your regime choice at the start of the year, they compute TDS based on that regime. But at the time of actual ITR filing, you can use either regime, regardless of what you told your employer.

Scenarios:

Declared new regime to employer, filing old regime in ITR: Employer deducted TDS based on new regime (lower TDS). When filing under old regime with deductions, your actual tax may be lower. Result: a refund for the excess TDS deducted.

Declared old regime to employer, filing new regime in ITR: Employer deducted TDS based on old regime (potentially higher, if deductions declared were substantial). When filing under new regime, your actual tax may be lower. Result: a refund.

In both cases, the regime difference settles at ITR filing time. There's no penalty for telling your employer one thing and filing another; the final ITR is what matters for tax compliance.

The practical advice: Declare the regime you're most likely to use to your employer, to minimise TDS and maximise monthly take-home. If uncertain, declare new regime (your employer will deduct lower TDS), and then calculate both at filing time to confirm. The worst case is a small amount due at filing; the best case is a refund.

Tax on Specific Income Types Under Each Regime

Both regimes use the same tax rate for certain income types:

Capital gains: The rate on equity LTCG (12.5%), equity STCG (20%), and debt fund gains (slab rate) is the same regardless of whether you chose old or new regime. The regime choice only affects regular income slabs.

Special rates remain the same in both regimes:

These special rates were introduced by Budget 2024 and have not been touched since, including by Budget 2026, so they still apply for FY 2026-27.

What changes between regimes is only: the slab rate applied to regular income (salary, business, other sources).

What the Income Tax Portal Shows When You File

When you file on the IT portal (incometax.gov.in), the system now shows a real-time comparison after you enter income details.

Pick the right year first. Income earned in FY 2026-27 is filed under AY 2027-28. The Income-tax Act, 2025, in force from 1 April 2026, folds the two labels into a single "tax year 2026-27", so you will see both terms in circulation; they describe the same income.

1. Enter income details for your applicable form (ITR-1 or ITR-2)
2. The portal computes estimated tax under both regimes automatically
3. You choose which regime to apply in the regime selection section

The portal's calculation is based on what you've entered, so its comparison is only as accurate as the data you input. If you've pre-filled deductions correctly, the comparison is reliable.

Tax slabs and rates are subject to annual change through the Union Budget, and the crossover point shifts with every Budget. Run both regimes on your actual numbers against the latest Income Tax Department notifications (ideally with a CA, for advice specific to your situation) before locking in a choice.

The regimes will keep changing with each Budget. The habit that survives every change is the one this guide is built on: run both on your own numbers, then choose.