Know which tax regime saves more tax for you after Budget 2026: Break-even point will help you choose a better regime

While many hoped that Budget 2026 would have changed the tax slabs, standard deduction, but it did not happen. Thus the earlier tax rates and slab continues for FY 2026-27.

Since the introduction of the alternative tax regime, the Government has consistently made changes to encourage taxpayers to move towards a simpler tax structure. As a result, a large number of taxpayers have already shifted to the new regime, while many others continue to evaluate whether the switch is beneficial for them.

With the Union Budget 2026 now announced and both the old and the new tax regimes continuing to coexist, it becomes important to reassess this choice. This article analyses the break-even point at which the tax liability under both regimes is the same, helping taxpayers decide which regime may be more suitable for them.


The table below outlines the breakeven points for the new and old tax regimes based on the availability of different deductions:

Nature of deduction available in the normal tax regime	Breakeven point	When is it beneficial to opt for the new tax regime of Section 205 of the 2025 Act (Sec. 115BAC of the 1961 Act)?	Reference
No deduction is allowable	-	Always	Table 1
Deduction allowable under Section 123 of the 2025 Act (Sec. 80C of the 1961 Act)	-	Always	Table 2
Deduction allowable under: Sections 123 of the 2025 Act (Sec. 80C of the 1961 Act) Section 126 of the 2025 Act (Sec. 80D of the 1961 Act)	-	Always	Table 3
Deduction allowable under: Sections 123 of the 2025 Act (Sec. 80C of the 1961 Act) Section 126 of the 2025 Act (Sec. 80D of the 1961 Act) Section 22 of the 2025 Act (Sec 24 of the 1961 Act) – for interest on housing loan	-	Always	Table 4

Table 1: Individual not eligible for any deduction

Income	Tax liability under the New Regime	Tax liability under the Normal regime (for AY 2027-28)	Net tax saving
6,00,000	-	33,800	33,800
7,00,000	-	54,600	54,600
8,00,000	-	75,400	75,400
9,00,000	-	96,200	96,200
10,00,000	-	1,17,000	1,17,000
11,00,000	-	1,48,200	1,48,200
12,00,000	-	1,79,400	1,79,400
13,00,000	78,000	2,10,600	1,32,600
14,00,000	93,600	2,41,800	1,48,200
15,00,000	1,09,200	2,73,000	1,63,800

Table 2: Individual eligible for deduction under section 123 of 2025 Act (Sec. 80C of the 1961 Act)

Income	Tax liability under the New Regime	Tax liability under the Normal Regime (for AY 2027-28)	Net tax saving
6,00,000	-	-	-
7,00,000	-	23,400	23,400
7,25,000	-	28,600	28,600
7,50,000	-	33,800	33,800
7,75,000	-	39,000	39,000
8,00,000	-	44,200	44,200
9,00,000	-	65,000	65,000
10,00,000	-	85,800	85,800
11,00,000	-	1,06,600	1,06,600
12,00,000	-	1,32,600	1,32,600
13,00,000	78,000	1,63,800	85,800
14,00,000	93,600	1,95,000	1,01,400
15,00,000	1,09,200	2,26,200	1,17,000

Table 3: Assessee is eligible for deduction under sections 123 and 126 of the 2025 Act (Sec. 80C and 80D of the 1961 Act)

Income	Tax liability under the New Regime	Tax liability under the Normal regime (for AY 2027-28)	Net tax saving
6,00,000	-	-	-
7,00,000	-	-	-
7,50,000	-	23,400	23,400
7,75,000	-	28,600	28,600
8,00,000	-	33,800	33,800
8,50,000	-	44,200	44,200
9,00,000	-	54,600	54,600
9,50,000	-	65,000	65,000
10,00,000	-	75,400	75,400
11,00,000	-	96,200	96,200
12,00,000	-	1,17,000	1,17,000
13,00,000	78,000	1,48,200	70,200
14,00,000	93,600	1,79,400	85,800
15,00,000	1,09,200	2,10,600	1,01,400

Table 4: Assessee is eligible for deduction under section 123 and 126, and deduction for interest on housing loan under section 22(1)(b) of the 2025 Act [Sec. 80C, 80D and 24(b) of the 1961 Act)

Income	Tax liability under the New Regime	Tax liability under the Normal Regime (for AY 2027-28)	Net Tax Saving
6,00,000	-	-	-
7,00,000	-	-	-
8,00,000	-	-	-
9,00,000	-	-	-
10,00,000	-	33,800	33,800
11,00,000	-	54,600	54,600
12,00,000	-	75,400	75,400
13,00,000	78,000	96,200	18,200
14,00,000	93,600	1,17,000	23,400
14,50,000	1,01,400	1,32,600	31,200
14,75,000	1,05,300	1,40,400	35,100
15,00,000	1,09,200	1,48,200	39,000
16,00,000	1,24,800	1,79,400	54,600
17,00,000	1,45,600	2,10,600	65,000
18,00,000	1,66,400	2,41,800	75,400
19,00,000	1,87,200	2,73,000	85,800
20,00,000	2,08,000	3,04,200	96,200
25,00,000	3,43,200	4,60,200	1,17,000
30,00,000	4,99,200	6,16,200	1,17,000