Old vs New Tax Regime in India: Find Your Breakeven Deductions with Python

Mridul Nanda — Sun, 15 Nov 2026 08:35:59 +0000

India's new tax regime is now the default, but for many salaried people the old regime still wins. The question is always the same: how much in deductions do I need before the old regime beats the new one? That number is the breakeven, and it is easy to compute in about 40 lines of Python.

This post walks through the FY 2025-26 rules for a salaried resident individual (no surcharge, no marginal relief, to keep it simple).

The rules we need

New regime: standard deduction of Rs 75,000, then slabs of 0% up to 4 lakh, 5% to 8 lakh, 10% to 12 lakh, 15% to 16 lakh, 20% to 20 lakh, 25% to 24 lakh and 30% above. A rebate of up to Rs 60,000 makes tax nil if taxable income is 12 lakh or less.

Old regime: standard deduction of Rs 50,000 plus your other deductions (80C, HRA, home-loan interest and so on), then 0% up to 2.5 lakh, 5% to 5 lakh, 20% to 10 lakh and 30% above. A rebate of up to Rs 12,500 applies if taxable income is 5 lakh or less.

Both regimes add 4% health and education cess.

The code

def slab_tax(income, slabs):
    tax, lower = 0.0, 0
    for upper, rate in slabs:
        if income > lower:
            tax += (min(income, upper) - lower) * rate
        lower = upper
    return tax

INF = float("inf")
NEW = [(400_000, 0), (800_000, .05), (1_200_000, .10), (1_600_000, .15),
       (2_000_000, .20), (2_400_000, .25), (INF, .30)]
OLD = [(250_000, 0), (500_000, .05), (1_000_000, .20), (INF, .30)]

def new_regime(salary):
    taxable = max(salary - 75_000, 0)
    tax = slab_tax(taxable, NEW)
    if taxable <= 1_200_000:
        tax = max(tax - 60_000, 0)
    return round(tax * 1.04)

def old_regime(salary, deductions):
    taxable = max(salary - 50_000 - deductions, 0)
    tax = slab_tax(taxable, OLD)
    if taxable <= 500_000:
        tax = max(tax - 12_500, 0)
    return round(tax * 1.04)

def breakeven(salary, step=1_000):
    target = new_regime(salary)
    d = 0
    while old_regime(salary, d) > target:
        d += step
        if d > salary:
            return None
    return d

for s in (1_000_000, 1_500_000, 2_000_000, 3_000_000):
    print(f"{s:>10,}  new={new_regime(s):>8,}  breakeven={breakeven(s)}")

The output

Salary	Tax under new regime	Deductions needed for old regime to match
10 lakh	Rs 0	Rs 4.5 lakh
15 lakh	Rs 97,500	Rs 5.44 lakh
20 lakh	Rs 1,92,400	Rs 7.09 lakh
30 lakh	Rs 4,75,800	Rs 8 lakh

What this tells you

Up to about 12.75 lakh of salary, the new regime is almost impossible to beat because the rebate wipes out the tax.
Above that, the old regime only wins if you have big deductions, usually a combination of HRA and home-loan interest on top of a full 80C.
The breakeven climbs with salary, so a deduction mix that worked at 15 lakh may stop working after a raise. Re-run it every year.

Going further

Real returns are messier: HRA depends on rent and city, home-loan interest has its own caps, employer NPS is allowed in both regimes, and capital gains are taxed separately. If you'd rather not maintain the code, I built TaxSense AI, a conversational income-tax copilot that runs both regimes on your actual numbers, prices each deduction in rupees and gives you a filing-ready PDF. It's part of the MNB Research suite of AI tools for Indian taxpayers and businesses.