Income Tax Calculator FY 2025-26: Old vs New Regime

For the financial year 2025-26, under the new tax regime, a resident individual with taxable income up to twelve lakh rupees pays no tax at all, because the Section 87A rebate of up to sixty thousand rupees cancels the tax entirely. For a salaried person, adding the seventy-five thousand rupee standard deduction means a salary of up to about twelve lakh seventy-five thousand can be entirely tax-free.

This is a rebate, not a blanket exemption, so if your taxable income crosses twelve lakh the rebate disappears, though marginal relief then protects you from a sudden large jump. Under the old regime, the tax-free limit is much lower, at five lakh of taxable income, using the smaller twelve thousand five hundred rupee rebate.

For the financial year 2025-26, the new regime is better for most salaried people, because the twelve lakh rebate and lower slab rates outweigh the deductions available under the old regime for the majority of taxpayers. The old regime is better only when you can claim large deductions, such as a full one and a half lakh under 80C, a substantial HRA exemption, and up to two lakh of home loan interest, which together bring your taxable income down enough to beat the new regime lower rates.

The right answer depends on your specific income and deductions, which is why this calculator computes both and tells you which is cheaper. As a rule of thumb, if your total deductions are modest, choose the new regime; if they are very large, check the old regime.

The Section 87A rebate is a tax rebate that reduces or eliminates the tax for lower and middle income earners. Under the new regime for FY 2025-26, it is up to sixty thousand rupees, which makes the tax zero for anyone with taxable income up to twelve lakh. Under the old regime, it is smaller, up to twelve thousand five hundred rupees, making tax zero up to five lakh.

The rebate applies only to income taxed at normal slab rates, not to special-rate income such as capital gains, lottery winnings or crypto gains, which are taxed separately and cannot use the rebate. If your taxable income exceeds the threshold, the rebate is lost entirely, though marginal relief cushions the impact just above the limit in the new regime.

Marginal relief prevents a small increase in income from causing a disproportionately large jump in tax when you cross the twelve lakh rebate threshold in the new regime. Without it, someone whose taxable income rose from twelve lakh to twelve lakh five thousand would lose the entire sixty thousand rupee rebate, meaning a five thousand rupee rise triggers sixty thousand of tax. Marginal relief limits the tax to the amount by which your income exceeds twelve lakh, plus four percent cess.

So at twelve lakh five thousand, the tax is about five thousand two hundred rupees, not sixty thousand. The relief applies between twelve lakh and roughly twelve lakh seventy thousand, tapering off as the normal slab tax becomes lower than the relief figure. This calculator applies marginal relief automatically.

Under the new regime for FY 2025-26, there is no tax on income up to four lakh rupees. Income from four to eight lakh is taxed at five percent, eight to twelve lakh at ten percent, twelve to sixteen lakh at fifteen percent, sixteen to twenty lakh at twenty percent, twenty to twenty-four lakh at twenty-five percent, and above twenty-four lakh at thirty percent. However, because of the Section 87A rebate, anyone with taxable income up to twelve lakh pays zero tax, so the slab rates effectively apply only above that level.

A four percent health and education cess is added to the tax, and a surcharge applies for incomes above fifty lakh, capped at twenty-five percent in the new regime. The standard deduction of seventy-five thousand is subtracted from salary before the slabs apply.

The old regime allows a wide range of deductions that the new regime disallows. The main ones are Section 80C, up to one and a half lakh for investments like PPF, ELSS, life insurance premiums, EPF and principal repayment of a home loan; Section 80D, up to one lakh for health insurance premiums for yourself, family and parents; the HRA exemption for rent paid; Section 24b, up to two lakh for interest on a self-occupied home loan; and Section 80CCD(1B), an extra fifty thousand for NPS contributions over the 80C limit.

There are many others, such as 80E for education loan interest and 80G for donations. These deductions reduce your taxable income under the old regime, and the more you can claim, the more likely the old regime is to beat the new regime for you.

Surcharge is an additional tax on your income tax, applying only to high incomes. It is charged at ten percent where your taxable income exceeds fifty lakh, fifteen percent above one crore, twenty-five percent above two crore, and thirty-seven percent above five crore. However, the new regime caps the surcharge at twenty-five percent, so the thirty-seven percent rate applies only under the old regime.

The surcharge is calculated on the tax amount, not the income, so it is a tax on tax. After the surcharge is added, the four percent health and education cess is applied to the total of tax plus surcharge. For very high earners, the surcharge significantly raises the effective tax rate above the headline thirty percent slab rate, which the calculator accounts for automatically.

The health and education cess is an additional four percent levied on your total income tax, including any surcharge, under both the old and new regimes. It is used to fund health and education initiatives. Because it applies to the tax plus surcharge rather than the income, it adds four percent to whatever your tax works out to.

For example, if your tax after rebate is one lakh, the cess adds four thousand, making the total one lakh four thousand. It is unavoidable and applies to everyone who pays tax, so the calculator includes it in the final figure to give you the true total tax rather than just the slab tax before cess.

Yes, the standard deduction applies under both regimes, but the amount differs. The new regime gives a standard deduction of seventy-five thousand rupees, while the old regime gives fifty thousand. It is a flat deduction from your salary income that requires no proof or documentation, and it applies automatically to salaried employees and pensioners. Because it is subtracted from your salary before the slab rates apply, it effectively raises the income at which tax begins.

The larger seventy-five thousand deduction in the new regime is one reason the tax-free salary for a salaried person reaches about twelve lakh seventy-five thousand rather than exactly twelve lakh. Self-employed and business taxpayers do not get the standard deduction, as it applies to salary income only.

Capital gains are taxed separately from your salary at special rates and do not benefit from the Section 87A rebate or the normal slabs. Short-term capital gains on listed equity shares and equity mutual funds held under a year are taxed at a flat twenty percent. Long-term capital gains on the same, held over a year, are taxed at twelve and a half percent on the amount exceeding a one and a quarter lakh annual exemption.

Because these are special-rate incomes, they are excluded from the twelve lakh rebate calculation, so even if your salary is within the tax-free limit, any capital gains are taxed on top. This calculator focuses on salary and slab-rate income; capital gains should be computed separately and added to your total tax liability.

Salaried individuals can generally switch between the old and new regime each financial year, choosing whichever is more beneficial when they file their return. This flexibility means you are not locked into a past choice and can reassess annually as your income and deductions change. However, individuals with business or professional income face restrictions: once they opt out of the new regime to use the old one, they may switch back to the new regime only once, and switching is more limited.

For most salaried taxpayers, the practical approach is to run the comparison each year, as this calculator does, and elect the cheaper regime at filing. Because the new regime is the default, you must actively choose the old regime if it is better for you.

For the financial year 2025-26, the last date to file your income tax return is generally the thirty-first of July 2026 for individuals filing ITR-1 or ITR-2, who do not require a tax audit. For taxpayers filing ITR-3 or ITR-4 who are not subject to audit, the due date is often extended, and for those requiring an audit it is later still, typically the thirty-first of October.

Filing by the due date avoids late fees and interest, and lets you carry forward certain losses. It is advisable not to wait until the deadline, as last-minute filing risks errors and portal congestion. Always check the current year notified dates, as the government occasionally extends them. Filing on time also ensures any refund of excess tax deducted is processed promptly.

Under the old regime, senior citizens aged sixty and above enjoy a higher basic exemption limit of three lakh rupees, and super senior citizens aged eighty and above get five lakh, compared with two and a half lakh for others. They also benefit from a higher TDS threshold on interest income and certain other concessions. Under the new regime, however, the exemption limit is four lakh for everyone regardless of age, so there is no separate senior citizen slab.

This means seniors need to compare the two regimes carefully: the old regime higher exemption and deductions may suit those with significant medical or investment deductions, while the new regime four lakh exemption and lower rates may suit those without. This calculator uses the standard slabs; seniors on the old regime should account for their higher exemption.

Freelancers and self-employed professionals are taxed under the same regime slabs as salaried individuals, but with key differences. They do not receive the standard deduction, which applies only to salary income, so their taxable income is not reduced by the seventy-five thousand or fifty thousand. However, they can deduct their business expenses from their professional income before tax, and many opt for the presumptive taxation scheme under Section 44ADA, which lets eligible professionals declare fifty percent of gross receipts as income, simplifying their tax.

Under the old regime, freelancers can also claim the usual deductions like 80C and 80D. This calculator is designed around salaried income with the standard deduction; a freelancer should enter their net professional income after expenses and ignore the standard deduction effect, or use a dedicated freelancer calculator.

The new regime disallows almost all deductions, so any amounts you enter for 80C, 80D, HRA, home loan interest or NPS are applied only to the old regime calculation, not the new one. Under the new regime, the calculator subtracts only the seventy-five thousand standard deduction from your salary before applying the slabs, ignoring the other deductions entirely, because the law does not permit them. This is deliberate and correct: the whole trade-off between the regimes is that the new regime offers lower rates and the twelve lakh rebate in exchange for giving up deductions, while the old regime keeps the deductions but charges higher rates.

By applying your deductions only to the old regime, the calculator gives a fair comparison, showing whether your deductions under the old regime are large enough to beat the new regime lower rates and rebate. A handful of deductions, such as the employer NPS contribution under 80CCD(2), are allowed even in the new regime, but the common personal deductions are not.

The old regime can still be better if your total deductions are large enough to bring your taxable income down substantially below what it would be under the new regime. The classic case is someone with a home loan, who can claim up to two lakh of interest under Section 24b, plus a full one and a half lakh under 80C from the loan principal and other investments, plus health insurance under 80D, plus a significant HRA exemption if renting. Stacked together, these deductions can exceed three or four lakh, and for certain income levels that is enough to make the old regime cheaper despite its higher rates.

This is most likely for taxpayers in the middle to upper income range who have both a home loan and strong investments. The only way to know for certain is to compute both, which this calculator does, so rather than assuming, enter your actual deductions and let the verdict tell you which regime saves you more.