Lower rates or more deductions? Here's how the two regimes compare in 2026 and how to find your break-even.
Every taxpayer chooses between the old and new income tax regimes. The right pick depends entirely on how many deductions you actually claim. Use the Income Tax Calculator to test both with your numbers.
The new regime is the default. It offers lower slab rates and a higher basic exemption, but you give up most deductions and exemptions. It suits people who don't invest heavily in 80C instruments or claim HRA.
The old regime keeps the familiar deductions — 80C (up to ₹1.5 lakh), 80D (health insurance), HRA, home-loan interest and more. If you use these fully, the old regime can beat the new one despite higher headline rates.
The more deductions you genuinely claim, the more the old regime favours you. Below a certain deduction level, the new regime's lower rates win. There's no universal answer — it's arithmetic specific to you.
Sellers often have business deductions (expenses) that apply under both regimes — those reduce profit before the regime choice. The regime question is mainly about personal deductions like 80C and HRA on top of business income.
Our in-house CA & CS team set up your virtual office, VPOB and GST end to end — from ₹15,290/yr.
💬 Talk to our team View plans →The new regime is the default; you can opt for the old regime if it results in lower tax for you.
Salaried individuals can choose each year. Those with business income have more restrictions on switching, so plan carefully.
Run both through the free Income Tax Calculator with your income and deductions.
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