The break-even point represents the critical threshold where taxpayers must claim deductions to achieve similar tax liability under both tax regimes. According to calculations by Taxmann, the new tax regime becomes more advantageous when total deductions fall below the break-even amount, while the old tax regime proves superior when deductions exceed these thresholds. This analysis provides a clear decision framework for taxpayers evaluating their options for Assessment Year 2026-27.
The break-even deduction requirements vary significantly across different income levels, as reported by Taxmann. For taxpayers earning ₹8 lakh, the threshold stands at ₹3 lakh in deductions. At higher income levels, the break-even points increase substantially, with those earning ₹10 lakh requiring ₹5 lakh in deductions, while those in the ₹20-30 lakh bracket need approximately ₹7.75 lakh in deductions to achieve similar tax liability under both regimes.
As of June 8, 2026, the Income-tax Department reported significant progress in tax return filings for Assessment Year 2026-27. According to department data, over 1.6 crore taxpayers have filed their returns, while more than 1.52 crore return filers have also verified their ITRs. The ITR filing deadline for taxpayers filing ITR-1 and ITR-2 is set for July 31, 2026, providing taxpayers with adequate time to evaluate their tax regime selection based on these break-even calculations.
The break-even analysis serves as a practical tool for taxpayers to evaluate their tax regime selection based on actual deduction claims. As reported by Taxmann, taxpayers earning ₹8-10 lakh typically require deductions of ₹3-5 lakh to favor the old regime, while those in the ₹12.5-30 lakh bracket need deductions of ₹4.75-7.75 lakh to make the old regime more beneficial. This framework allows taxpayers to make informed decisions about which regime aligns better with their specific deduction claims and income levels.
