How to use the Income Tax Calculator (Old vs New Regime)
- Enter your gross annual salary and any other income such as interest or rent.
- Choose your age group — it changes the old regime's tax-free limit.
- Fill in the deductions you can claim. They only affect the old regime; leave a field at 0 if it doesn't apply.
- Compare the two totals. The calculator highlights the regime with lower tax.
Formula
Taxable income = Gross income − Deductions
Tax = Slab tax − Rebate + Surcharge
Total tax = Tax × 1.04 (4% cess)
Tax slabs for FY 2026-27
| Taxable income | Rate |
|---|---|
| Up to ₹4 lakh | Nil |
| ₹4–8 lakh | 5% |
| ₹8–12 lakh | 10% |
| ₹12–16 lakh | 15% |
| ₹16–20 lakh | 20% |
| ₹20–24 lakh | 25% |
| Above ₹24 lakh | 30% |
| Taxable income | Rate |
|---|---|
| Up to ₹2.5 lakh | Nil (₹3 lakh at 60–79; ₹5 lakh at 80+) |
| ₹2.5–5 lakh | 5% |
| ₹5–10 lakh | 20% |
| Above ₹10 lakh | 30% |
Both regimes add 4% health and education cess, and a surcharge on very high incomes (above ₹50 lakh). The new regime's surcharge stops at 25%; the old regime goes up to 37% above ₹5 crore.
Rebate: when tax becomes zero
- New regime: no tax if taxable income is up to ₹12 lakh. Just above that, marginal relief limits tax to the amount by which income exceeds ₹12 lakh. With the ₹75,000 standard deduction, salary up to ₹12.75 lakh is effectively tax-free.
- Old regime: no tax if taxable income is up to ₹5 lakh (rebate up to ₹12,500). There is no marginal relief, so tax starts in full just above ₹5 lakh.
Which regime is better for you?
It depends on how much you can deduct. For a ₹15 lakh salary, the old regime only beats the new one when your total deductions — including the ₹50,000 standard deduction — exceed about ₹6 lakh. Most people without large HRA and home-loan claims pay less under the new regime.
| New regime | Old regime | |
|---|---|---|
| Deductions | ₹75,000 | ₹2,27,400 |
| Taxable income | ₹14,25,000 | ₹12,72,600 |
| Tax incl. cess | ₹97,500 | ₹2,02,051 |
Here the new regime saves ₹1,04,551 a year. Even at ₹25 lakh salary with ₹3 lakh HRA exemption, ₹2 lakh home-loan interest and full investments (₹7.77 lakh of deductions), the new regime still comes out ₹22,651 cheaper. Run your own numbers — the answer changes with your deductions.
Deductions the old regime allows
- HRA exemption if you rent — work it out with the HRA Calculator.
- Tax-saving investments such as PPF, ELSS, EPF, life insurance and home-loan principal, up to ₹1,50,000 (earlier section 80C).
- Health insurance premiums for yourself, your family and your parents, within age-based limits.
- Home-loan interest on a self-occupied house, up to ₹2,00,000.
- Your own NPS contribution, an extra ₹50,000 over the investment limit.
- Professional tax, education-loan interest, certain donations and others.
Note
Worked example
₹12 lakh salary, no deductions beyond the standard deduction
- New regime: taxable ₹11,25,000 → slab tax ₹52,500, fully rebated → ₹0
- Old regime: taxable ₹11,50,000 → ₹1,12,500 + 30% of ₹1,50,000 = ₹1,57,500 + 4% cess
New regime ₹0 vs old regime ₹1,63,800
Important notes
- This is an estimate for planning. Capital gains, business income with special rates, and the detailed conditions of each deduction aren't modelled.
- Your employer deducts TDS based on the regime you choose and the proofs you submit; the final tax is settled when you file your return.
Frequently asked questions
Is income up to ₹12 lakh tax-free?
Under the new regime, yes: taxable income up to ₹12 lakh attracts no tax because of the rebate. For salaried people, the ₹75,000 standard deduction takes that to ₹12.75 lakh of salary. The rebate doesn't apply to income taxed at special rates, such as some capital gains.
Can I switch between the old and new regime every year?
Salaried individuals without business income can generally choose each year. People with business income have more restricted options to switch back.
Is HRA allowed in the new regime?
No. HRA exemption and most deductions are available only under the old regime.
Is the standard deduction available in both regimes?
Yes: ₹75,000 under the new regime and ₹50,000 under the old regime, for salary and pension income.
Which regime is the default?
The new regime. If you want the old regime, you need to choose it — with your employer for TDS, and in your income-tax return.
Sources and review
Last reviewed on by the BizToolsIndia editorial team. Official references:
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