Income Tax Calculator
Old regime vs new regime on your income in one glance — FY 2025-26 slabs, 87A rebate and cess included, with the cheaper regime called out.
What this income tax calculator does
India's direct taxation framework currently offers two parallel personal tax regimes: the New Tax Regime (Section 115BAC), which features lower concessional tax slabs but eliminates almost all itemized deductions, and the Old Tax Regime, which features higher slab rates but retains popular deductions under Chapter VI-A (such as Section 80C, 80D, 80CCD, HRA, and home loan interest).
Determining which regime results in lower tax outgo depends on your gross income, age profile, and total eligible deductions. This calculator evaluates your financial profile across both regimes side by side using the statutory slabs for FY 2025-26 (AY 2026-27) and FY 2024-25 (AY 2025-26), applying the Section 87A rebate, standard deduction, and mandatory 4% Health & Education Cess.
Statutory Tax Slabs for FY 2025-26 (New vs Old Regime)
Under the revised New Tax Regime (the statutory default regime under Section 115BAC):
- Up to ₹4,00,000: Nil
- ₹4,00,001 to ₹8,00,000: 5%
- ₹8,00,001 to ₹12,00,000: 10%
- ₹12,00,001 to ₹16,00,000: 15%
- ₹16,00,001 to ₹20,00,000: 20%
- ₹20,00,001 to ₹24,00,000: 25%
- Above ₹24,00,000: 30%
Salaried taxpayers under the New Regime receive a statutory Standard Deduction of ₹75,000. Furthermore, under Section 87A, resident individuals with taxable income up to ₹12,00,000 receive a tax rebate up to ₹60,000, effectively reducing tax payable to ₹0 for gross salaried income up to ₹12,75,000.
Under the Old Tax Regime, the basic exemption limit is ₹2,50,000 (₹3,00,000 for senior citizens aged 60–79, and ₹5,00,000 for super seniors aged 80+). Slabs are 5% (₹2.5L–₹5L), 20% (₹5L–₹10L), and 30% (>₹10L). Salaried individuals receive a ₹50,000 standard deduction, and the Section 87A rebate applies only up to ₹5,00,000 taxable income.
Income Tax Calculation Mechanics
Total Tax Payable = (Basic Slab Tax − Section 87A Rebate + Surcharge) × 1.04
- Taxable Income: Gross Total Income − Eligible Deductions (Standard Deduction, 80C, 80D, etc.)
- Basic Slab Tax: Computed progressively across income brackets as defined by Finance Act
- Section 87A Rebate: Up to ₹60,000 in New Regime (if taxable income ≤ ₹12,00,000) or up to ₹12,500 in Old Regime (if taxable income ≤ ₹5,00,000)
- Surcharge: Applies progressively on high net-worth individuals with income exceeding ₹50 lakh
- Health & Education Cess: Mandatory 4% levied on the sum of income tax and applicable surcharge
Worked example: Tax on ₹12,00,000 Salaried Income
Consider a resident salaried individual under 60 years earning ₹12,00,000 gross salary in FY 2025-26 with ₹1,50,000 in 80C deductions:
- New Regime:
- Gross Salary: ₹12,00,000
- Less Standard Deduction: ₹75,000 → Net Taxable Income: ₹11,25,000
- Basic Slab Tax: ₹0 (up to 4L) + ₹20,000 (4L–8L @ 5%) + ₹32,500 (8L–11.25L @ 10%) = ₹52,500
- Section 87A Rebate: Full ₹52,500 absorbed (taxable income ≤ ₹12,00,000)
- Net Tax Payable: ₹0
- Old Regime:
- Gross Salary: ₹12,00,000
- Less Standard Deduction: ₹50,000
- Less Section 80C: ₹1,50,000 → Net Taxable Income: ₹10,00,000
- Basic Slab Tax: ₹0 + ₹12,500 (5%) + ₹1,00,000 (20%) = ₹1,12,500
- Add 4% Cess: ₹4,500
- Net Tax Payable: ₹1,17,000
- Tax Saved by choosing New Regime: ₹1,17,000
Old vs New Regime Tax Liability Comparison (FY 2025-26)
| Gross Annual Salary | Old Regime (with ₹1.5L 80C) | New Regime | Cheaper Regime | Annual Savings |
|---|---|---|---|---|
| ₹7,50,000 | ₹23,400 | ₹0 | New Regime | ₹23,400 |
| ₹10,00,000 | ₹75,400 | ₹0 | New Regime | ₹75,400 |
| ₹12,75,000 | ₹1,32,600 | ₹0 | New Regime | ₹1,32,600 |
| ₹15,00,000 | ₹2,10,600 | ₹91,000 | New Regime | ₹1,19,600 |
| ₹20,00,000 | ₹3,66,600 | ₹1,92,400 | New Regime | ₹1,74,200 |
| ₹25,00,000 | ₹5,22,600 | ₹3,19,800 | New Regime | ₹2,02,800 |
Breakeven Analysis: When does the Old Regime make sense?
Because the New Tax Regime offers substantially wider slabs, a ₹75,000 standard deduction, and a zero-tax threshold up to ₹12.75 lakh, the Old Regime is only beneficial if your total eligible deductions are substantial. For an individual earning ₹15 lakh, you typically need total deductions exceeding ₹4.25 lakh (e.g., ₹1.5L in 80C, ₹50k in 80CCD NPS, ₹50k in 80D health insurance, and ₹2L in home loan interest under Section 24b) to beat the New Regime.
If you do not have a home loan or significant rent to claim under HRA, the New Regime almost universally yields lower tax outgo and eliminates the hassle of tracking and submitting investment receipts to your employer.
Surcharge and Marginal Relief Mechanics
For high-income earners, surcharge rates apply on total tax liability when income exceeds specific statutory milestones: 10% for income between ₹50 lakh and ₹1 crore; 15% between ₹1 crore and ₹2 crore; and 25% above ₹2 crore under the New Regime (capped at 25%, unlike 37% in older provisions).
Marginal Relief ensures that the additional tax payable (including surcharge) does not exceed the incremental income earned over the threshold (e.g., earning ₹50,10,000 does not result in surcharge exceeding the extra ₹10,000 earned).
Frequently Asked Questions on Income Tax
Statutory provisions, regime switching rules, Section 87A rebate, and filing guidelines.
Under the New Tax Regime, salaried individuals pay zero tax on gross salaries up to ₹12,75,000. This is made possible by the ₹75,000 standard deduction (which brings net taxable income to ₹12,00,000) combined with the Section 87A tax rebate, which wipes out the entire tax liability up to ₹12 lakh.
Section 87A provides a tax rebate to resident individual taxpayers whose net taxable income does not exceed statutory thresholds. In FY 2025-26 under the New Regime, the rebate is available up to ₹60,000 for taxable incomes up to ₹12,00,000. Under the Old Regime, the rebate is limited to ₹12,500 for taxable incomes up to ₹5,00,000.
The New Tax Regime is the statutory default regime. Salaried employees can choose between the Old and New Regime at the beginning of the financial year for employer TDS purposes, and can make their final choice when filing their annual Income Tax Return (ITR-1 or ITR-2) by July 31.
No. Individuals with business or professional income (filing ITR-3 or ITR-4) can opt out of the New Regime only once by submitting Form 10-IEA before the due date. Once they switch back to the New Regime in a subsequent year, they are permanently locked into the New Regime for lifetime business earnings.
The New Regime allows very few deductions: (1) Standard Deduction of ₹75,000 for salaried employees and pensioners, (2) Employer contribution to NPS under Section 80CCD(2) up to 14% of salary for government and 14% for private sector employees, (3) Transport allowance for divyang employees, and (4) Gratuity and leave encashment exemptions on retirement.
Marginal Relief prevents unfair tax spikes when income marginally exceeds surcharge thresholds (₹50 lakh, ₹1 crore, etc.) or rebate limits. It caps the tax increase so that total extra tax payable never exceeds the incremental income earned above the threshold.
Yes. For FY 2025-26 under the New Tax Regime, family pensioners receive a standard deduction of ₹25,000 (increased from ₹15,000). Salaried individuals and regular pensioners receive ₹75,000.
Capital gains are taxed under special sections rather than regular slab rates: listed equity Long-Term Capital Gains (LTCG) are taxed at 12.5% above ₹1.25 lakh under Section 112A, and Short-Term Capital Gains (STCG) are taxed at 20% under Section 111A. Salaried income cannot absorb capital losses.
For non-audit individual taxpayers (salaried, professionals, small businesses), the statutory filing deadline is July 31 following the close of the financial year. Belated returns filed up to December 31 attract late filing fees up to ₹5,000 under Section 234F plus interest on unpaid taxes under Section 234A.
Yes. A mandatory 4% Health & Education Cess is automatically computed on the sum of basic income tax and applicable surcharge across both regimes in strict compliance with the Finance Act.