New regime vs old regime for 2026-27: the deductions you need before the old regime wins

The short answer

For a resident individual under 60 with ordinary income only, in tax year 2026-27, the old regime draws level with the new regime at ₹ 5,37,500 of deductions on a new regime total income of ₹ 15,00,000, at ₹ 7,08,334 on ₹ 20,00,000, and at ₹ 7,75,000 on anything from ₹ 24,00,000 to ₹ 50,00,000. One rupee of deduction more and the old regime is cheaper. FY 2025-26 gives the same figures to the rupee.

Up to ₹ 12,00,000 the new regime's tax is nil after the rebate, so the old regime can at best tie, and only once its own total income is down to ₹ 5,00,000: ₹ 3,00,000 of deductions on ₹ 8,00,000, ₹ 7,00,000 on ₹ 12,00,000.

The deduction in these figures is the gap between the two regimes' total incomes; getting from the client's figures to those two totals is the CA's working.

The rule in plain words

The new regime is the default regime: under s.202(1) of the Income-tax Act, 2025 it needs no election, and for FY 2025-26 it is s.115BAC(1A)(iii) of the Income-tax Act, 1961. In both Acts it is one true slab table for every age, each band charged at its own rate: nil up to ₹ 4,00,000, then 5%, 10%, 15%, 20% and 25% on successive bands of ₹ 4,00,000, and 30% above ₹ 24,00,000.

The old regime, Part I-B, Paragraph A of the First Schedule to the Finance Act, 2026 for tax year 2026-27 and Part I-A, Paragraph A for FY 2025-26, is a base plus a rate on the excess. For an individual under 60 it is nil to ₹ 2,50,000, 5% to ₹ 5,00,000, then ₹ 12,500 plus 20% of the excess over ₹ 5,00,000, and ₹ 1,12,500 plus 30% of the excess over ₹ 10,00,000.

The rebate is where the two part company, and it is open to a resident individual alone. Under the new regime, s.156(2) for tax year 2026-27 and the first proviso to s.87A for FY 2025-26, it is up to ₹ 60,000 on total income up to ₹ 12,00,000; above it the tax before cess is held to the excess over ₹ 12,00,000 until the taper runs out at about ₹ 12,70,588. Under the old regime, s.156(1) and s.87A(1) respectively, it is up to ₹ 12,500 on total income up to ₹ 5,00,000, and it is a cliff with no marginal relief: one rupee over, the tax with cess is ₹ 13,000.

For a salaried client the standard deduction is ₹ 75,000 under the new regime and ₹ 50,000 under the old, capped at the salary, under s.19(1) (Table: Sl. No. 2) for tax year 2026-27 and s.16(ia) for FY 2025-26. Cess is 4% under both, and the calculator ships it as an editable figure because the Finance Act, 2026 sets it for these two years and nothing later.

Both rate tables, slice by slice

The rate on each rupee in each slice, before rebate, surcharge and cess, for a resident individual under 60 in tax year 2026-27.

The old regime's nil band is ₹ 3,00,000 for a resident of 60 to 80 and ₹ 5,00,000 for a resident of 80 or more, with no 5% band; the new regime has no age band.

Tax under each regime with no deductions

Tax payable with cess on the same total income under each regime for tax year 2026-27, for a resident individual under 60 with ordinary income only and nothing claimed.

No surcharge applies at exactly ₹ 50,00,000 under either regime, because each surcharge clause starts where income exceeds its threshold. FY 2025-26 gives the same rows to the rupee.

The deductions at which the old regime draws level

The smallest whole rupee gap between the two total incomes at which the engine stops reporting the new regime as lower, searched for tax year 2026-27 for a resident individual in each age band with ordinary income only.

For a salaried client add the ₹ 25,000 standard deduction gap: at ₹ 20,00,000 an under 60 client needs ₹ 7,33,334 of the deductions only the old regime allows.

Conditions and edge cases a CA gets asked about

The figure stops moving at ₹ 24,00,000, because from there both tables charge 30% on the next rupee. It moves again above ₹ 50,00,000, where both regimes add surcharge from 10% but each on its own total income. At ₹ 53,00,000 the new regime's tax carries surcharge and the old regime's lower income carries none, so ₹ 3,85,000 of deductions is enough; by ₹ 60,00,000 both carry it and the figure is back at ₹ 7,75,000.

Age moves only the old regime, and only for a resident individual: nothing up to ₹ 12,00,000, where the old regime's rebate still stops at ₹ 5,00,000, and at ₹ 20,00,000 the figure falls from ₹ 7,08,334 under 60 to ₹ 7,00,000 at 60 to 80 and ₹ 6,66,667 at 80 and over.

A non-resident is on the old regime's under 60 table at any age and gets no rebate under either regime, so on ₹ 12,00,000 of total income they pay ₹ 62,400 under the new regime, not nil. A Hindu undivided family has the same choice, on the under 60 table and with no rebate.

Business or profession income turns the choice into a one way door. Under s.202(4) the old regime option, once exercised, applies to later years, may be withdrawn only once, and after that withdrawal the person is never again eligible while they have such income. Without such income the choice is free and annual.

Under the new regime the rebate is capped at the slab tax by s.156(3), so it never reaches the 20% on listed equity short term gains under s.196 or the 12.5% on long term gains under s.197 and s.198; under the old regime it reaches s.196 and s.197 gains but not s.198. At the top, the new regime's surcharge stops at 25% with no step at ₹ 5,00,00,000, where the old regime's rises to 37%: on each further rupee at ₹ 10,00,00,000, that is 39% against 42.744% with cess.

What changes for tax year 2026-27 under the 2025 Act

Nothing in the arithmetic of the comparison: the slab tables, the new regime's rebate, both surcharge ladders and the cess are the same in both years. What changes is the law the figures sit in.

Tax year 2026-27 is the first year of the Income-tax Act, 2025. s.202(1) takes over from s.115BAC(1A)(iii), s.156 from s.87A, and s.19(1) (Table: Sl. No. 2) from s.16(ia). FY 2025-26 stays under the Income-tax Act, 1961, which s.536(c) of the 2025 Act keeps alive for any tax year beginning before 1 April 2026.

The election moves. For FY 2025-26 a person with business or profession income elects the old regime in Form 10-IEA; for tax year 2026-27 the election is made under rule 136 of the Income-tax Rules, 2026, in the return itself, and there is no Form 10-IEA.

For FY 2025-26 the calculator ships the old regime rebate cap and threshold and the standard deduction under both regimes as editable fields; for tax year 2026-27 none of them is. The ₹ 75,000 under the new regime is the one to look at hardest: Finance (No. 2) Act 2024 keyed it to clause (ii) of s.115BAC(1A), which the Finance Act 2025 confined to AY 2025-26, so the cross reference points at a clause that no longer applies. The intent is plainly ₹ 75,000, and the calculator ships it.

What the calculator does

The income tax calculator beside this guide takes the new regime's total income, split the way the surcharge clauses need, and the old regime's own ordinary income, and returns tax under both regimes for tax year 2026-27 or FY 2025-26, each step against its provision. It reports a saving only when the old regime's own figure is entered. It does not search for the break-even, and it carries dividend, gains and winnings to the old column unchanged. Every head of income, every deduction and the election itself stay with the CA.