Old vs new tax regime calculator
Enter your income and deductions. See exactly which regime saves you more — and by how much.
FY 2026–27 figures under the New Income Tax Act, 2025. Includes 4% education cess and marginal relief on the new regime. Surcharge applies above ₹50L. These are estimates — consult a CA or the Income Tax Department portal for a precise computation.
How to use this calculator
What changed in the new tax regime for FY 2025-26?
The Union Budget 2025 revised the new tax regime slabs significantly. The key changes: the nil-tax slab was extended from ₹3L to ₹4L, new slabs of 5%, 10%, 15%, 20%, 25%, and 30% were introduced in ₹4L bands, and the Section 87A rebate was raised so that income up to ₹12 lakh attracts zero tax (after rebate). For salaried employees who also get a ₹75,000 standard deduction, this means effective zero tax up to ₹12.75 lakh. These changes are notified under the Finance Act 2025 and apply from Assessment Year 2026-27 (Financial Year 2025-26).
How the comparison works
The calculator computes your tax under both regimes simultaneously:
- New regime: starts from gross income, subtracts standard deduction (₹75,000 for salaried) and employer NPS contribution, applies new slabs, applies 87A rebate and marginal relief where applicable.
- Old regime: subtracts standard deduction, HRA exemption, 80C, 80D, home loan interest (Section 24b), and employer NPS, then applies age-based slabs and 87A rebate (up to ₹5L taxable, capped at ₹12,500).
- Both regimes then add surcharge (if applicable) and 4% education cess.
Understanding marginal relief
If your taxable income in the new regime is just above ₹12 lakh — say ₹12.5 lakh — the raw slab tax would jump from zero to a meaningful amount. Marginal relief prevents this cliff: your tax is capped at the amount by which your income exceeds ₹12 lakh. So at ₹12.5L taxable, you pay at most ₹50,000 in tax. This is specified under the Finance Act and automatically calculated here.
HRA exemption: the biggest variable
For many salaried employees in metro cities, HRA exemption is the single largest deduction — often ₹2–4 lakh annually. Since HRA is not available in the new regime, it can tilt the comparison toward the old regime for those paying significant rent. The HRA exemption here uses the statutory formula: the minimum of actual HRA received, 50% of basic salary (40% for non-metro), and actual rent paid minus 10% of basic salary. Enter your monthly HRA, rent, and basic salary in the deductions panel to see the exact exemption amount.
When the old regime still wins
The old regime beats the new one when your total additional deductions (beyond the standard deduction) are large enough to bring your taxable income down substantially. A rough rule: if you can claim ₹3.5L+ in deductions beyond the standard deduction — through a combination of HRA, 80C (₹1.5L), 80D, and home loan interest — the old regime is often competitive at incomes above ₹12L. The calculator tells you the exact breakeven for your specific numbers.
Frequently asked questions
Q: Which tax regime is better for salaried employees in FY 2025-26?
For most salaried employees earning up to ₹12 lakh, the new tax regime is better because income tax is zero after the Section 87A rebate. For those earning more, it depends on their deductions. If you claim significant HRA, 80C (₹1.5L), 80D, and home loan interest, the old regime may save more. The crossover point is roughly when your total deductions exceed ₹3–4 lakh above the ₹75,000 standard deduction. Use this calculator with your actual figures to compare precisely.
Q: What are the new tax regime slabs for FY 2025-26?
The new tax regime slabs for FY 2025-26 (as revised in Budget 2025) are: ₹0–4L: 0%, ₹4–8L: 5%, ₹8–12L: 10%, ₹12–16L: 15%, ₹16–20L: 20%, ₹20–24L: 25%, above ₹24L: 30%. Salaried employees also get a ₹75,000 standard deduction, and the Section 87A rebate means zero tax for income up to ₹12 lakh (before cess). These slabs are notified under the Finance Act 2025.
Q: What deductions are available in the new tax regime?
The new tax regime allows very few deductions. The main ones are: ₹75,000 standard deduction for salaried employees and pensioners (added from FY 2024-25), employer NPS contribution under Section 80CCD(2) (up to 14% of basic salary), standard deduction for family pension (₹25,000 or one-third of pension, whichever is less), and transport allowances for specially-abled employees. Most other deductions — 80C, 80D, HRA, home loan interest under Section 24(b), LTA — are not available in the new regime.
Q: What is the Section 87A rebate for FY 2025-26?
Under the new tax regime, Section 87A provides a rebate equal to 100% of your tax liability (i.e., zero tax) if your total taxable income is ₹12 lakh or less. This means a salaried employee earning up to ₹12.75 lakh (₹12L + ₹75K standard deduction) pays zero income tax. Marginal relief applies if your income is slightly above ₹12 lakh — your tax cannot exceed the amount by which your income exceeds ₹12 lakh. Under the old regime, the 87A rebate applies only up to ₹5 lakh taxable income, capped at ₹12,500.
Q: Can I switch between old and new tax regime every year?
Salaried employees (with no business income) can switch between old and new tax regime every year at the time of filing their Income Tax Return. From FY 2023-24, the new tax regime is the default — if you do not specify otherwise, your employer will deduct TDS under the new regime. To opt for the old regime, inform your employer at the start of the financial year using a declaration form. Business owners and professionals can switch only once — from new to old — and cannot switch back.
Q: Does HRA exemption apply in the new tax regime?
No. HRA exemption under Section 10(13A) is not available under the new tax regime. If you receive HRA and pay significant rent, this can make the old regime more attractive. The HRA exemption in the old regime is calculated as the minimum of: (1) actual HRA received, (2) 50% of basic salary for metro cities or 40% for non-metro cities, and (3) actual rent paid minus 10% of basic salary.