The new regime is the default. If you file and say nothing, you are taxed under it, and the old regime is now something you have to claim in the return. For most salaried people with ordinary deductions the new regime also produces the smaller bill — but not for everyone, and the crossover is much higher up the income scale than the headlines suggest.
Both regimes continue. No phase-out has been announced. The Income-tax Act, 2025 took effect on 1 April 2026 and repealed the Income-tax Act, 1961, carrying the new regime into section 202 rather than the old section 115BAC. If a page you are reading still says 115BAC, it has not been updated since the change of Act.
A note on the section numbers used below. The familiar ones — 80C, 80D, 10(13A), 87A, 80CCD(2) — belong to the 1961 Act. The 2025 Act renumbers them, and we could not read the department’s own text of every renumbered provision to confirm each new number, so this page keeps the old labels. They are still what your employer’s declaration forms and most search results use. Treat them as names for the relief rather than as current statutory citations, and quote the new numbering only from the Act itself.
The short version: the old regime wins only when your deductions clear a threshold that broadly rises with income — roughly ₹3.5 lakh of deductions at ₹10 lakh of salary, and about ₹8 lakh once you are past ₹25 lakh. Work out your own position on the income tax calculator rather than trusting any single break-even number, including ours.
Which year are you actually looking at
Before anything else, settle the year, because two naming systems are now running side by side and several published sources conflate them.
- AY 2026-27 means the assessment year for the income you earned in FY 2025-26 — the year you are filing for now.
- Tax year 2026-27, the term the Income-tax Act, 2025 uses, means the income of FY 2026-27 — the year you are currently living in.
So “AY 2026-27” and “tax year 2026-27” point at different twelve-month periods, one year apart. When you see a slab table, check which label it carries. In practice this matters less than it sounds, because the personal slabs are identical for both years, but it matters a great deal when you are reading about a rule that changed.
One honesty note on our own data: the FY 2026-27 slabs below are marked likely rather than verified. Budget 2026 announced no change to personal slabs, the rebate, the standard deduction, surcharge or cess, and there is no reference to any such change anywhere in the Budget releases — strong evidence, but we were not able to read section 202 of the new Act directly to confirm it. Check the Act text yourself if you are planning around a large number.
The slabs, side by side
New regime. Applies to everyone, at every age, for both FY 2025-26 and FY 2026-27. The standard deduction for a salaried taxpayer or pensioner is ₹75,000.
| Total income (after the standard deduction) | Rate |
|---|---|
| Up to ₹4,00,000 | Nil |
| ₹4,00,001 to ₹8,00,000 | 5% |
| ₹8,00,001 to ₹12,00,000 | 10% |
| ₹12,00,001 to ₹16,00,000 | 15% |
| ₹16,00,001 to ₹20,00,000 | 20% |
| ₹20,00,001 to ₹24,00,000 | 25% |
| Above ₹24,00,000 | 30% |
Old regime. The standard deduction here is ₹50,000, and this is the only regime where your age changes the answer.
| Total income (after the standard deduction) | Under 60 | Age 60 to 79 | Age 80 and above |
|---|---|---|---|
| Up to ₹2,50,000 | Nil | Nil | Nil |
| ₹2,50,001 to ₹3,00,000 | 5% | Nil | Nil |
| ₹3,00,001 to ₹5,00,000 | 5% | 5% | Nil |
| ₹5,00,001 to ₹10,00,000 | 20% | 20% | 20% |
| Above ₹10,00,000 | 30% | 30% | 30% |
Health and education cess of 4% is added to the tax under both regimes.
The age bands are old-regime only. The new regime has no age differentiation whatever — ₹4 lakh of basic exemption for a 25-year-old and for an 85-year-old. This trips up a lot of readers because the Income Tax Department’s own senior-citizens help page still displays an obsolete new-regime table with age bands in it. Treat every age-based exemption figure you see as an old-regime figure until proved otherwise.
The ₹12 lakh headline, explained properly
You will have seen “no tax up to ₹12 lakh”. It is true, and it does not work the way most people assume.
There is no ₹12 lakh exemption. The tax is computed normally on the slabs above — ₹20,000 on the 5% band plus ₹40,000 on the 10% band, ₹60,000 in all on a total income of exactly ₹12 lakh — and then the section 87A rebate wipes out up to ₹60,000 of it. The result is nil tax, arrived at by cancellation rather than by exemption.
Because a salaried taxpayer also gets the ₹75,000 standard deduction first, the equivalent figure on gross salary is ₹12.75 lakh. A pensioner gets the same. Someone whose income is business profit or interest gets ₹12 lakh flat, with no standard deduction to add on.
The part that breaks it for a lot of people
The rebate is not available against capital gains or other income taxed at special rates. This is the most consequential sentence on this page and almost nobody puts it in the headline.
Two separate things follow from it. First, tax on your special-rate income stands on its own — the rebate cannot be used against it, so a nil-tax outcome on your salary does not make the gains tax free. Second, that income still counts towards your total income, so equity gains on top of an ₹11 lakh salary can push you past the ₹12 lakh line and remove the rebate from the ordinary income as well.
If you sold shares, units or property during the year, the ₹12 lakh headline is not describing you. Read the rate that applies to your particular gain on the Income Tax Department site, and run the whole thing through the calculator with the gain included rather than working from your salary alone.
Marginal relief, and why ₹1,000 extra does not cost you ₹60,000
Take the rebate literally and the cliff is absurd: at ₹12,00,000 you owe nothing, at ₹12,01,000 the rebate falls away and you would owe more than ₹60,000 on an extra ₹1,000 of income. That is not what happens, because marginal relief applies at the edge. Your tax is limited to the amount by which your income exceeds ₹12 lakh. Earn ₹12,10,000 and the tax before cess is capped at ₹10,000, not the ₹61,500 the slabs would otherwise produce.
Relief stops binding at roughly ₹12.7 lakh of total income, where the ordinary slab computation finally falls below the excess-income cap. That figure is arithmetic — the point where ₹60,000 plus 15% of the excess equals the excess itself — rather than a number the department publishes, so treat it as approximate. Above it you simply pay the slab tax.
What you give up, and what survives
Choosing the new regime means giving up essentially the whole deduction apparatus:
- Section 80C — life insurance premiums, EPF, PPF, ELSS, tuition fees, home loan principal.
- Section 80D health insurance premiums.
- House rent allowance under section 10(13A). Worth checking before you decide: the exemption is generous only in the four cities that count as metros for this purpose — Delhi, Mumbai, Kolkata and Chennai. Bengaluru, Hyderabad, Pune and Gurugram take the lower 40% limit, contrary to almost universal belief. The HRA calculator works it out on the actual rule.
- 80TTA and 80TTB on bank and post office interest — ₹10,000 for those under 60, ₹50,000 for senior citizens. Both are old-regime only, which matters if you live off deposit interest; see tax on FD interest.
- Home loan interest on a self-occupied property. Be precise here, because this is a frequent error: interest on borrowed capital remains deductible at its actual value under the new regime for a let-out property. It is never deductible for a self-occupied one. If you live in the flat you are paying interest on, the new regime gives you nothing for it.
What survives the new regime:
- The ₹75,000 standard deduction for salary and pension, which is larger than the old regime ₹50,000.
- The employer NPS contribution under section 80CCD(2), capped at 14% of salary under the new regime against 10% for private-sector employees under the old. Government employees get 14% either way. Your own NPS contributions under 80CCD(1) and 80CCD(1B) do not survive — see NPS vs PPF for how that changes the case for the scheme.
- The family pension deduction, capped at ₹25,000 under the new regime against ₹15,000 under the old. It is a proportion of the pension subject to that ceiling, not a flat sum, so a small family pension gets less than the cap.
Where the break-even actually sits
There is no single break-even figure, and any page giving you one is compressing away the thing that matters. The old regime wins only when your deductions — over and above the standard deduction — exceed a threshold that climbs with income and then flattens. It is not a smooth climb: the requirement spikes inside the rebate zone around ₹12.75 lakh, falls back once the rebate is gone, and rises again from there.
Working from the slabs above, here is the total of extra deductions the old regime needs just to draw level, for a salaried taxpayer under 60:
| Gross salary | Deductions needed for the old regime to match |
|---|---|
| ₹10,00,000 | about ₹3,50,000 |
| ₹12,75,000 | about ₹7,25,000 |
| ₹15,00,000 | about ₹5,45,000 |
| ₹20,00,000 | about ₹7,10,000 |
| ₹25,00,000 and above | about ₹8,00,000 |
The ₹12.75 lakh row is not a typo. That is the rebate zone, where the new regime charges nothing at all, so the old regime has to drive taxable income down to ₹5 lakh — the point at which its own smaller rebate of ₹12,500 cancels the tax — to match a bill of zero. Around that income the new regime is close to unbeatable.
Take the ₹15 lakh row concretely. Under the new regime, ₹15 lakh of salary less the ₹75,000 standard deduction leaves ₹14,25,000, on which the tax is ₹93,750 plus cess, or ₹97,500. To match that under the old regime you need taxable income down to about ₹9,06,250 — which, after the ₹50,000 standard deduction, means roughly ₹5,43,750 of further deductions. A full 80C claim, a health insurance premium and self-occupied home loan interest together will usually not reach it. HRA is normally what closes the gap, which is why the old regime survives mostly among people paying substantial rent in a metro.
Past about ₹25 lakh both regimes are taxing the marginal rupee at 30%, so the gap settles at a constant ₹8 lakh of deductions. Reaching that without a large rent claim is rare.
Above ₹50 lakh: the surcharge gap
Surcharge starts at 10% above ₹50 lakh of total income, rises to 15% above ₹1 crore and 25% above ₹2 crore under both regimes. Above ₹5 crore they part company: the old regime still carries the 37% surcharge, while the new regime holds at 25%.
Grossed up with cess, that is a top effective marginal rate of about 42.7% under the old regime against 39% under the new. At those incomes no realistic set of deductions closes a 3.7 percentage point gap on the top slice of income, so the new regime is effectively the only sensible choice.
Choosing, and the deadline that takes the choice away
If your income is salary, pension, house property, capital gains or other sources — no business or professional income — you make the choice in the return itself, and you may choose differently each year. What you told your employer in April drives TDS only; it does not bind your filing.
The consequence people get caught by: the old regime can only be chosen in a return filed by the due date. A belated return is taxed under the new regime whatever your deductions look like. For AY 2026-27, covering the income of FY 2025-26:
| Filing | Due date |
|---|---|
| Salaried and other non-audit taxpayers | 31 July 2026 |
| Non-audit business taxpayers | 31 August 2026 |
| Audit cases | 31 October 2026 |
| Transfer pricing cases | 30 November 2026 |
| Belated or revised return | 31 December 2026 |
No extension had been announced as at 18 August 2026. Check the e-filing portal before relying on any date here, and see our walkthrough on filing your ITR online for the mechanics.
Taxpayers with business or professional income are treated more strictly: the election is made through a separate prescribed form filed alongside the return, and the ability to move back and forth between regimes is limited. Confirm the current form on the e-filing portal rather than relying on a form number quoted anywhere, including here — the form series moved with the change of Act.
Before you decide, do one thing: total your actual deductions for the year — not the ones you intend to make, the ones you have made — and put both regimes through the income tax calculator with your real figures, including any capital gains. Most people who assume the old regime is better are carrying an assumption from a year when their rent, their home loan or their 80C position was different.
Common questions
Is the old regime being phased out?
No phase-out has been announced. Both regimes continue, and the Income-tax Act, 2025 — which took effect on 1 April 2026 and repealed the Income-tax Act, 1961 — carries the new regime forward as section 202 rather than the old section 115BAC. What has changed is the default: if you say nothing, you are taxed under the new regime, and the old one has to be chosen actively in your return. Anyone who benefits from the old regime therefore has to keep choosing it, year after year.
I earn ₹11 lakh in salary but I also had equity gains. Do I still pay no tax?
Probably not. The rebate that produces the nil-tax result up to ₹12 lakh — section 87A in the 1961-Act numbering everyone still uses — is not available against capital gains and other income taxed at special rates. So the tax on those gains stands on its own even though your salary is below the line, and the gains also count towards your total income, which can push you past ₹12 lakh and remove the rebate from the rest. This is the single most common way the ₹12 lakh headline fails in practice. Check the rate applicable to your particular gain on the Income Tax Department site before assuming the outcome.
Do senior citizens get a higher exemption limit under the new regime?
No. The new regime has no age differentiation at all — the basic exemption is ₹4 lakh for a 25-year-old and for an 85-year-old alike. The higher limits of ₹3 lakh for those aged 60 to 79 and ₹5 lakh for those aged 80 and above exist only under the old regime. The Income Tax Department's own senior-citizens help page still displays an obsolete new-regime table with age bands in it, which is why the error is so widespread. Read the age-based limits as old-regime figures only.
Can I switch between the regimes every year?
If your income is salary, pension, house property, capital gains or other sources — that is, no business or professional income — yes. You choose in the return itself, and you can choose differently next year. The catch is the deadline: the option to take the old regime is available only in a return filed by the due date. File late and the new regime applies for that year, whatever your deductions look like. Taxpayers with business or professional income face stricter rules and a separate prescribed form, so confirm the current requirement on the e-filing portal.
Does the employer NPS deduction really differ between the regimes?
Yes, and it is often missed. The deduction for your employer contribution to NPS, section 80CCD(2) in the older numbering, is capped at 14% of salary under the new regime, against 10% for private-sector employees under the old regime. Government employees get 14% either way. It is one of the few deductions that survives the new regime intact, and for someone whose employer offers a meaningful NPS contribution it quietly narrows the gap in favour of the new regime.
Sources
Rates and rules on this page were read directly from the following sources on the dates shown. Figures change — if you are about to act on one, confirm it at the source.