Income Tax Calculator 2025-26: Old vs. New Regime – Find Out Which Saves You More!

The Income Tax Department has introduced a new tool to compare tax liabilities under the Old and New Tax Regimes for FY 2025-26. The revised New Tax Regime offers lower tax rates and a higher rebate, making income up to ₹12 lakh tax-free, while the Old Regime still benefits those with high deductions. Taxpayers must evaluate their eligible deductions to choose the most beneficial regime.

CONTENTS:

• Income Tax Calculator: Compare Old vs. New Regime for FY 2025-26
• Old vs. New Tax Regime: Which is Better for a ₹15 Lakh Salary in FY 2025-26?
• Old vs. New Tax Regime: Which is Better for Salaried Employees?

Income Tax Calculator 2025-26: Old vs. New Regime – Find Out Which Saves You More!

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

Income Tax Calculator 2025-26: Old vs. New Regime The Income Tax Department has introduced a new tool to help taxpayers compare the tax liabilities under the New Tax Regime (NTR) for FY 2024-25 and FY 2025-26, following the latest budget announcements. This calculator allows individuals to determine which regime is more beneficial based on their income and applicable deductions.

How to Use the Income Tax Calculator:

1. Visit the Official Calculator
2. The “Tax Payer” field will be pre-filled as “Individual.”
3. Select Residential Status – Choose “Resident” if you live in India.
4. Enter Annual Taxable Income (excluding special rate income).
5. Click anywhere outside the input field, and the tool will instantly display your total tax for both years, including potential savings under the new regime.

Old Tax Regime Calculator:

Income Tax Calculator 2025-26: Old vs. New Regime Since the old tax regime remains unchanged in Budget 2025-26, you can still use the existing calculator by:

1. Visiting the income tax portal’s old tax calculator.
2. Inputting your salary, rental, business income, and eligible deductions (such as 80C, 80D, etc.).
3. Comparing the tax payable under both regimes.

Income Tax Slabs for FY 2025-26:

New Tax Regime (Revised in Budget 2025-26)

• Income 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%

Those earning up to ₹12.75 lakh annually (including a standard deduction of ₹75,000) will pay zero tax.

Old Tax Regime (Unchanged)

• Income up to ₹2,50,000 – Nil
• ₹2,50,001 to ₹5,00,000 – 5%
• ₹5,00,001 to ₹10,00,000 – 20%
• Above ₹10,00,000 – 30%

Senior citizens (60-80 years) have a basic exemption limit of ₹3,00,000, while super senior citizens (above 80 years) have a limit of ₹5,00,000.

The revised New Tax Regime aims to provide tax relief, especially for the middle class, with exemptions now extended to ₹12 lakh from ₹7 lakh earlier.

Old vs. New Tax Regime: Which is Better for a ₹15 Lakh Salary in FY 2025-26?

Income Tax Calculator 2025-26: Old vs. New Regime The Income Tax Department has introduced an easy-to-use tool that enables taxpayers to compare their liabilities under the New Tax Regime for FY 2024-25 and FY 2025-26. Following the Union Budget 2025 announcement by Finance Minister Nirmala Sitharaman, modifications were made to the New Tax Regime, including a basic tax exemption of up to ₹4 lakh, while the Old Tax Regime remained unchanged.

Comparing Tax Liabilities for a ₹15 Lakh Annual Salary

Tax Calculation Under the Old Tax Regime

The Old Tax Regime follows these tax slabs:

• ₹0 – ₹2.5 lakh: 0%
• ₹2.5 lakh – ₹5 lakh: 5%
• ₹5 lakh – ₹10 lakh: 20%
• Above ₹10 lakh: 30%

Deductions & Exemptions Available:

• Standard Deduction: ₹50,000
• Section 80C (Investments like PPF, EPF, LIC, etc.): ₹1,50,000
• Section 80D (Health Insurance Premium): ₹75,000
• Home Loan Interest Deduction (Section 24B): ₹2,00,000
• Additional NPS Deduction (Section 80CCD(1B)): ₹50,000
• HRA Exemption: ₹3,00,000 (Assumed for a salaried employee with HRA of ₹25,000/month)

Net Taxable Income Calculation:

• Gross Salary: ₹15,00,000
• Total Deductions: ₹8.25 lakh
• Taxable Income: ₹6.75 lakh

Tax Computation:

• ₹0 – ₹2.5 lakh: ₹0
• ₹2.5 lakh – ₹5 lakh at 5%: ₹12,500
• ₹5 lakh – ₹6.75 lakh at 20%: ₹35,000
• Total Tax: ₹47,500
• Cess (4%): ₹1,900
• Final Tax Liability: ₹49,400

Tax Calculation Under the New Tax Regime

The New Tax Regime (FY 2025-26) follows these slabs:

• ₹0 – ₹4 lakh: 0%
• ₹4 lakh – ₹8 lakh: 5%
• ₹8 lakh – ₹12 lakh: 10%
• ₹12 lakh – ₹16 lakh: 15%
• ₹16 lakh – ₹20 lakh: 20%
• ₹20 lakh – ₹24 lakh: 25%
• Above ₹24 lakh: 30%

Deductions & Exemptions Available:

• Standard Deduction: ₹75,000 (No other deductions allowed)

Net Taxable Income Calculation:

• Gross Salary: ₹15,00,000
• Less Standard Deduction: ₹75,000
• Taxable Income: ₹14,25,000

Tax Computation:

• ₹0 – ₹4 lakh: ₹0
• ₹4 lakh – ₹8 lakh at 5%: ₹20,000
• ₹8 lakh – ₹12 lakh at 10%: ₹40,000
• ₹12 lakh – ₹14.25 lakh at 15%: ₹33,750
• Total Tax: ₹93,750
• Cess (4%): ₹3,750
• Final Tax Liability: ₹97,500

Which Tax Regime Is More Beneficial?

For a ₹15 lakh salary, the Old Tax Regime offers ₹48,100 in tax savings compared to the New Tax Regime, provided the individual can claim all deductions and exemptions (especially HRA benefits and home loan interest deductions).

Key Considerations:

• If you maximize deductions, the Old Tax Regime is more beneficial.
• If you do not have significant deductions, the New Tax Regime might be simpler and easier to manage.

Choosing between the two regimes depends on individual financial planning and eligible deductions.

Old vs. New Tax Regime: Which is Better for Salaried Employees?

Income Tax Calculator 2025-26: Old vs. New Regime The government has introduced various incentives to encourage taxpayers to adopt the new tax regime, indicating a long-term plan to phase out the old one. Although the new regime is now the default, the old tax regime remains available.

Budget 2025 Update

Income Tax Calculator 2025-26: Old vs. New Regime For the financial year 2025-26, income up to ₹12 lakhs will have no tax liability due to revised slab rates and increased rebates.

Under the updated New Tax Regime for FY 2025-26, income up to ₹4,00,000 is tax-free. Earnings between ₹4,00,001 and ₹8,00,000 are taxed at 5%, while income from ₹8,00,001 to ₹12,00,000 is subject to a 10% tax rate. The next slab, from ₹12,00,001 to ₹16,00,000, is taxed at 15%, whereas income between ₹16,00,001 and ₹20,00,000 is taxed at 20%. For earnings between ₹20,00,001 and ₹24,00,000, the tax rate is 25%, and any income above ₹24,00,000 is taxed at 30%.

The rebate under Section 87A has been raised from ₹25,000 to ₹60,000, ensuring that income up to ₹12 lakh is effectively tax-free. However, this rebate does not apply to incomes taxed at special rates (e.g., capital gains under Section 112A). Marginal relief on the rebate remains applicable.

Key Differences Between Old and New Tax Regime

New Tax Regime Highlights

The new tax regime was introduced in Budget 2020, offering lower tax rates but without several exemptions and deductions available in the old regime, such as HRA, LTA, and deductions under Section 80C, 80D, etc. Initially, few taxpayers opted for it, leading the government to introduce reforms in Budget 2023 to make it more attractive. These reforms remain in effect for FY 2024-25 and beyond:

• Higher Tax Rebate Limit: Full tax rebate on income up to ₹7 lakh, compared to ₹5 lakh under the old regime.
• For FY 2024-25, income up to ₹3,00,000 is exempt from tax. Earnings between ₹3,00,001 and ₹7,00,000 are taxed at 5%, while income from ₹7,00,001 to ₹10,00,000 is subject to a 10% tax rate. The next slab, from ₹10,00,001 to ₹12,00,000, is taxed at 15%, whereas income between ₹12,00,001 and ₹15,00,000 is taxed at 20%. Any income above ₹15,00,000 is taxed at 30%.
• Increased Standard Deduction: Raised to ₹75,000 under the new regime.
• Higher Family Pension Deduction: Increased from ₹15,000 to ₹25,000.
• Reduced Surcharge for High Earners: The surcharge on income exceeding ₹5 crore has been cut from 37% to 25%, lowering the effective tax rate from 42.74% to 39%.
• Higher Leave Encashment Exemption: The limit for non-government employees has been raised from ₹3 lakh to ₹25 lakh.
• Default Tax Regime: Since FY 2023-24, the new regime is the default option, but taxpayers can still opt for the old regime by filing Form 10-IEA before the due date.

Old Tax Regime Benefits

The old tax regime allows taxpayers to claim over 70 exemptions and deductions, such as:

• Section 80C (₹1.5 lakh deduction on investments like EPF, PPF, ELSS, LIC)
• HRA (House Rent Allowance) & LTA (Leave Travel Allowance)
• Deductions for medical insurance (Section 80D), education loans (80E), home loan interest (24b), and donations (80G)

Which Tax Regime is Better for FY 2024-25?

Income Tax Calculator 2025-26: Old vs. New Regime The decision depends on the total deductions and exemptions you can claim under the old regime. Below are the breakeven thresholds—the deduction amounts required under the old regime to match the tax benefits of the new regime:

For an income of ₹7,00,000, with a net income of ₹6,50,000 after the ₹50,000 standard deduction, the tax payable under both regimes is ₹0, requiring at least ₹1,50,000 in deductions for the old regime to be beneficial.

At ₹8,00,000 income (₹7,50,000 after standard deduction), the tax payable is ₹36,400, and ₹1,38,500 in deductions is needed.

For ₹9,00,000 income (₹8,50,000 after deduction), the tax payable is ₹41,600, with a breakeven deduction of ₹2,12,500.

At ₹10,00,000 income (₹9,50,000 after deduction), the tax payable is ₹54,600, requiring ₹2,50,000 in deductions.

For ₹12,50,000 income (₹12,00,000 after deduction), the tax payable is ₹93,600, with a required deduction of ₹3,12,500.

At ₹15,00,000 income (₹14,50,000 after deduction), the tax payable is ₹1,45,600, needing ₹3,58,000 in deductions.

For ₹16,00,000 income (₹15,50,000 after deduction), the tax payable is ₹1,71,600, requiring ₹3,75,000 in deductions.

General Guidelines for Choosing Between Old vs. New Regime

• Income up to ₹7 lakh (with deductions under ₹1.25 lakh): Either regime works, as tax liability is zero in both.
• Income above ₹7 lakh & deductions under ₹1.5 lakh: The new tax regime is more beneficial.
• Deductions above ₹3.75 lakh: The old tax regime is more favorable.
• Deductions between ₹1.5 lakh – ₹3.75 lakh: The best choice depends on the specific income level.

Deductions & Exemptions: Old vs. New Regime

Available deductions vary across tax regimes:

• Rebate Eligibility (Section 87A): Up to ₹5 lakh under the old regime and the new regime until March 2023, increased to ₹7 lakh from FY 2023-24 onwards.
• Standard Deduction: ₹50,000 under the old regime, initially unavailable in the new regime but introduced at ₹50,000 in FY 2023-24 and increased to ₹75,000 in FY 2024-25.
• Deductions for HRA, LTA, Sections 80C, 80D, 80E, and 80G: Available only under the old regime, not applicable in any version of the new regime.
• Employer’s Contribution to NPS: Allowed under both the old and new regimes.
• Home Loan Interest (Self-Occupied Property): Deduction available under the old regime but not under the new regime.
• Home Loan Interest (Let-Out Property): Deduction available in both the old and new regimes.
• Leave Encashment Exemption: Capped at ₹3 lakh under the old regime and in the new regime until FY 2023-24, but significantly increased to ₹25 lakh in FY 2024-25.

Conclusion: Income Tax Calculator 2025-26: Old vs. New Regime

For those who claim higher deductions (above ₹3.75 lakh), the old regime remains more beneficial. However, for taxpayers with minimal deductions, the new regime offers lower tax rates and is easier to comply with. As the government aims to phase out the old tax regime, transitioning to the new structure might be a strategic choice for many.