Old vs New Tax Regime: Comparing AY 2026–27
Scope: financial year 2025–26, assessment year 2026–27. This guide explains how to compare the old and new income-tax regimes for that period. The figures below are not a tax calculation for income earned in a different year. Check the relevant year's rules before using them.
Start with the correct year and your income
List salary, interest, rent and any other income before comparing regimes. For AY 2026–27 the new regime is the default, while eligible taxpayers can choose the old regime. The old regime permits more deductions and exemptions; the new regime has different rates and fewer deductions. The result depends on what you can actually claim. See the Income Tax Department's AY 2026–27 guidance.
New-regime slab rates for AY 2026–27
The following rates apply to the relevant portion of ordinary taxable income, not to the whole income at one rate.
| Taxable income band | Rate on that band |
|---|---|
| Up to ₹4,00,000 | Nil |
| Above ₹4,00,000 up to ₹8,00,000 | 5% |
| Above ₹8,00,000 up to ₹12,00,000 | 10% |
| Above ₹12,00,000 up to ₹16,00,000 | 15% |
| Above ₹16,00,000 up to ₹20,00,000 | 20% |
| Above ₹20,00,000 up to ₹24,00,000 | 25% |
| Above ₹24,00,000 | 30% |
Source: Income Tax Department's ITR-2 FAQs. Rebate, surcharge, cess and income taxed at special rates can change the final amount. A slab table alone is not a final liability calculation.
Compare deductions accurately
For an employee in AY 2026–27, the standard deduction is limited to salary or ₹50,000, whichever is lower, in the old regime; the corresponding new-regime limit is ₹75,000. Do not treat every NPS contribution or insurance payment as deductible in both regimes. Check the exact section, eligibility and limit. The official ITR-1 validation rules distinguish the regimes and permitted deductions.
Use a complete comparison before deciding
Enter the same income details into both calculations, then include only eligible exemptions and deductions. Use the government's Income and Tax Estimator; for AY 2026–27 its instructions specify the Income-tax Act, 1961. Review credits and payments separately from the tax liability.
The process for choosing a regime differs when business or professional income is involved. Check the applicable form and deadline, or obtain individual advice from a qualified tax professional. Do not buy a policy or investment solely because a generic example promises tax savings. This article provides general information, not personal tax advice.
