Income Tax Calculator FY 2025-26

Choosing between the Old Tax Regime and the New Tax Regime is one of the most important financial decisions for every salaried Indian in FY 2025-26 (Assessment Year 2026-27). The Union Budget 2025 introduced significant changes to the new regime — most notably a dramatically enhanced Section 87A rebate that makes the effective tax liability zero for anyone with net taxable income up to ₹12 lakh. This has shifted the calculus for millions of taxpayers, making the new regime the default choice for most individuals earning up to ₹12.75 lakh per year.

What Changed in the New Regime for FY 2025-26?

The new tax regime for FY 2025-26 features seven tax slabs starting from 0% for income up to ₹4 lakh. The key landmark changes are: (1) Standard deduction of ₹75,000 is now available even under the new regime for salaried employees and pensioners — up from ₹50,000 under the old regime. (2) Section 87A rebate has been raised to cover taxable income up to ₹12 lakh, meaning zero tax liability. Combined with the standard deduction, a salaried individual earning up to ₹12.75 lakh per year pays absolutely no income tax under the new regime.

Old Regime: Who Should Still Choose It?

The old tax regime retains its advantage for taxpayers with high deduction claims. If you pay significant HRA in a metro city, have maximized your 80C investments (₹1.5 lakh in PPF, ELSS, EPF, LIC premium, home loan principal), have health insurance premiums (80D up to ₹25,000), and additionally contribute to NPS under 80CCD(1B) (extra ₹50,000), your total deductions could exceed ₹3–4 lakh. For incomes above ₹15 lakh with deductions exceeding ₹3.75 lakh, the old regime may still result in lower tax.

How to Use This Income Tax Calculator

1. Enter your Annual Gross Salary in the salary field
2. Enter your monthly HRA received and monthly rent paid, and select Metro or Non-Metro city
3. Input your 80C investments (PPF, ELSS, EPF, LIC, NSC, home loan principal — max ₹1.5 lakh)
4. Add your 80D health insurance premium (max ₹25,000 for self + family)
5. Add NPS additional contribution under 80CCD(1B) (max ₹50,000)
6. The calculator instantly shows tax under both regimes, the better one highlighted in green, and the monthly take-home salary

HRA Exemption Calculation

House Rent Allowance (HRA) exemption is one of the most valuable deductions available exclusively under the old regime. The exemption is the minimum of three amounts: (1) Actual HRA received from employer; (2) Rent paid minus 10% of basic salary; (3) 50% of basic salary for metro cities (Delhi, Mumbai, Chennai, Kolkata) or 40% for non-metro cities. This calculator automatically computes your HRA exemption and factors it into your old regime tax calculation.

The Break-Even Analysis: Old vs New Regime

For a gross salary of ₹10 lakh: If your deductions exceed approximately ₹1.75 lakh, the old regime saves more tax. For ₹15 lakh salary, the break-even deduction threshold is around ₹3.75 lakh. For ₹20 lakh and above, you need deductions exceeding ₹4.5–5 lakh to benefit from the old regime. Use this calculator to find your personal break-even point instantly.

Surcharge and Cess

In addition to the basic income tax, a Health and Education Cess of 4% is levied on the tax amount under both regimes. For very high incomes, surcharge also applies: 10% surcharge for income between ₹50L–₹1Cr; 15% for ₹1Cr–₹2Cr; 25% for ₹2Cr–₹5Cr; 37% for above ₹5Cr (under old regime). Under the new regime, the maximum surcharge rate is capped at 25%. This calculator includes the 4% cess in all calculations. Surcharge is not included as it applies to very high incomes.

Switching Between Regimes

Salaried employees can switch between old and new regime every year while filing their Income Tax Return (ITR). You declare your preferred regime to your employer for TDS purposes, but you can change it at the time of ITR filing if beneficial. Business owners and professionals, however, can only switch back from new to old regime once in a lifetime. The new regime is the default from FY 2023-24 onwards — you must actively opt for the old regime if you wish to claim deductions.