What is the Old vs New Tax Regime?
The old regime has higher rates but allows 80C, HRA, home loan interest, 80D and dozens of other deductions. The new regime has lower rates and wider slabs but almost no deductions beyond the standard one.
The decision is arithmetic, not preference. Broadly, if your total deductions exceed roughly ₹4–4.5 lakh, the old regime usually wins. Below that, the new regime does.
Formula & worked example
Compute both and compare:
Old: (income − ₹50,000 − all deductions) taxed at 0/5/20/30% slabs
Worked example: ₹16,00,000 income with ₹1.5L (80C), ₹2.4L HRA, ₹2L home loan interest and ₹25K (80D) = ₹6.15 lakh of deductions. New regime tax works out at ₹1,13,100; in the old regime the taxable figure falls to ₹9.35 lakh, giving tax of ₹1,03,480. Here the old regime wins by ₹9,620 — entirely because of the large HRA and interest claims. Note how narrow the gap is even with ₹6.15 lakh of deductions: the old regime only pulls ahead decisively when deductions go higher still.
How to use this old vs new tax regime calculator
- Enter your gross income before any deduction.
- Fill in what you actually claim, not what you could theoretically claim.
- HRA exemption is the least of: actual HRA, rent minus 10% of basic, or 50%/40% of basic.
- The winner is shown at the top with the rupee saving.
Smart tips
- Salaried taxpayers may switch regimes every year. Business income can switch only once.
- This comparison stops at slab tax, rebate and cess. Above ₹50 lakh of income a surcharge of 10–25% (up to 37% in the old regime above ₹5 crore) applies on top in both columns, which usually widens rather than reverses the gap.
- HRA and home loan interest are usually the deductions that tip the balance toward the old regime.
- If you rent and pay a home loan on a let-out property, the old regime is often substantially better.
- Declare your choice to your employer early — otherwise TDS defaults to the new regime and you wait for a refund.
Frequently asked questions
Which tax regime is better for me?
It depends only on deductions. Above roughly ₹4–4.5 lakh of total deductions the old regime usually wins; below that the new regime does. This calculator shows your exact figures.
Can I switch between regimes?
Salaried individuals can choose afresh each financial year when filing. Those with business income get one switch back to the old regime, after which the choice is locked.
Is the new regime the default?
Yes. Since FY 2023-24 the new regime applies unless you actively opt for the old one.
Does the old regime still have a rebate?
Yes, Section 87A gives up to ₹12,500 rebate for taxable income up to ₹5 lakh, versus ₹60,000 up to ₹12 lakh in the new regime.
Want the theory behind the numbers? Browse the Money Blog for worked guides.
Written by Gurjeet Singh, Sharpen Solutions. Last reviewed 15 Oct 2026. Sources: Income Tax Department — slab rates, s.87A rebate, surcharge and 4% cess, AY 2026-27 (page updated 9 Jul 2026). How we check these numbers.