Income Tax Calculator: Old vs New Tax Regime (FY 2025-26 / AY 2026-27)
Choosing between the Old and New Tax Regimes can be confusing. With recent updates altering standard deductions and rebate limits, figuring out your exact tax liability is critical for maximizing your take-home salary.
Use our free Income Tax Calculator below to instantly compare your tax outflow under both regimes and decide which option saves you the most money.
Old vs. New Tax Regime: Which Should You Choose?
The government has made the New Tax Regime the default option, sweetening the deal with lower slab rates and a higher tax-free threshold. However, the Old Tax Regime remains available and can still be highly beneficial if you utilize multiple tax-saving investment avenues.
- Choose the New Regime if: You prefer a straightforward tax calculation without locking your money into specific investments like PPF, ELSS, or life insurance. Under this regime, income up to ₹12 Lakh can be effectively tax-free due to the Section 87A rebate.
- Choose the Old Regime if: You pay significant house rent (HRA), have a high home loan interest (Section 24b), and maximize your Section 80C and 80D investments.
Income Tax Slabs for FY 2025-26 (AY 2026-27)
To understand how your tax is calculated, here are the updated slab rates for individuals below 60 years of age.
New Tax Regime Slab Rates
The New Regime offers a higher Standard Deduction of ₹75,000 for salaried individuals.
| Income Range | Tax Rate |
|---|---|
| Up to ₹4 Lakh | Nil |
| ₹4 Lakh to ₹8 Lakh | 5% |
| ₹8 Lakh to ₹12 Lakh | 10% |
| ₹12 Lakh to ₹16 Lakh | 15% |
| ₹16 Lakh to ₹20 Lakh | 20% |
| ₹20 Lakh to ₹24 Lakh | 25% |
| Above ₹24 Lakh | 30% |
Old Tax Regime Slab Rates
The Old Regime offers a Standard Deduction of ₹50,000 and allows you to claim traditional deductions (80C, 80D, etc.).
| Income Range | Tax Rate |
|---|---|
| Up to ₹2.5 Lakh | Nil |
| ₹2.5 Lakh to ₹5 Lakh | 5% |
| ₹5 Lakh to ₹10 Lakh | 20% |
| Above ₹10 Lakh | 30% |
Frequently Asked Questions (FAQs)
Is the new tax regime better than the old tax regime?
For middle-class taxpayers with a simple income structure and limited tax-saving investments and deductions, the new regime is generally more beneficial.
Is income up to ₹12 lakh tax-free under the new tax regime?
Yes, for income chargeable as per normal slab rates, up to ₹12 lakh can effectively be tax-free due to the Section 87A rebate.
What is the standard deduction under the new tax regime?
A standard deduction of ₹75,000 is available against salary income under the new regime.
What deductions are allowed in the new tax regime?
The employer’s contribution to a pension scheme (NPS) and home loan interest for let-out property are among the few popular deductions still available under the new regime.
Can I switch from the old to the new tax regime?
Yes. For business income taxpayers, Form 10-IEA is required to switch between the old and new tax regimes as per the Income Tax Act, 1961. Salaried individuals can choose their preferred regime every year when filing returns.
Does everyone have to file their income tax returns?
If an individual’s income is below the basic exemption limit, they are not required to file. However, if your income is less than the exemption limit but you want to claim an income tax refund (e.g., for deducted TDS), you must file an ITR.
Does the income tax calculator calculate for TDS?
No, the income tax calculator estimates your overall tax liability for the assessment year, but it does not compute the Tax Deducted at Source (TDS) removed directly from your paycheck.
How to calculate income tax on salary arrears?
You can simply include your salary arrears in the Gross Annual Income field in the calculator to estimate your total tax liability.
Can I use the calculator if I have income from multiple sources?
Yes, the calculator can estimate taxes for income from multiple sources. Simply combine your salary, interest income, rental income, etc., and input the total into the Gross Annual Income field.