The Income Tax Calculator for FY 2025-26 helps you compare both tax regimes and choose the one that minimizes your tax liability. With changes in tax laws, understanding the regime options is crucial for tax planning.
FY 2025-26: New vs Old Tax Regime
The Indian government introduced the new tax regime in Budget 2020. Taxpayers can now choose between:
Old Tax Regime (Existing Law)
Allows deductions under various sections (80C, 80D, HRA, etc.) with progressive tax rates.
New Tax Regime (Section 115BAC)
Simplified rates with limited deductions but lower tax liability for many taxpayers.
New Tax Regime Slabs (FY 2025-26)
| Income Bracket (₹) | Tax Rate | Cess (4%) | Total Tax |
|---|---|---|---|
| Up to 3,00,000 | NIL | NIL | NIL |
| 3,00,001 - 6,00,000 | 5% | 4% | 5.2% |
| 6,00,001 - 9,00,000 | 10% | 4% | 10.4% |
| 9,00,001 - 12,00,000 | 15% | 4% | 15.6% |
| 12,00,001 - 15,00,000 | 20% | 4% | 20.8% |
| Above 15,00,000 | 30% | 4% | 31.2% |
Old Tax Regime Slabs (FY 2025-26)
| Income Bracket (₹) | Tax Rate | Cess (4%) | Total Tax |
|---|---|---|---|
| Up to 2,50,000 | NIL | NIL | NIL |
| 2,50,001 - 5,00,000 | 5% | 4% | 5.2% |
| 5,00,001 - 10,00,000 | 20% | 4% | 20.8% |
| Above 10,00,000 | 30% | 4% | 31.2% |
Key Changes in 2025-26 Taxation
Standard Deduction
The standard deduction of ₹50,000 is available in both regimes. Old regime allows additional deductions under Section 80C (up to ₹1.5 lakh).
Surcharge
Applicable for high incomes:
- ₹50 lakh - 10% surcharge
- ₹1 crore - 15% surcharge
- ₹2 crore - 25% surcharge
- Above ₹2 crore - 35% surcharge
Education Cess
Currently at 4% on tax liability. Some proposals suggest reduction to 2% in Budget 2026.
Deductions Available in Each Regime
| Deduction | Old Regime | New Regime |
|---|---|---|
| Section 80C (PPF, ELSS, FDs) | ₹1.5 lakh | Not available |
| Standard Deduction | ₹50,000 | ₹50,000 |
| HRA Exemption | Available | Limited calculation |
| Home Loan Interest (80C) | ₹2 lakh | Limited |
| Medical Insurance (80D) | ₹25,000/50,000 | Partial |
| Senior Citizen (SC)") | Additional benefits | Limited |
Which Regime Should You Choose?
Choose Old Regime If:
- You have deductions totaling more than ₹1 lakh (80C + 80D + HRA + etc.)
- You own a home and can claim interest deduction under Section 24
- You have children in school and can claim education loan interest
- You are a senior citizen with additional benefits available
- Your investments exceed ₹2.5 lakhs under 80C, 80D etc.
Choose New Regime If:
- Your total deductions are below ₹1 lakh
- You have no major investment deductions under 80C
- You are salaried with limited perquisites
- You want simplified tax filing with fewer forms
- Your taxable income is between ₹3 lakh to ₹12 lakh
Real Example: Which Regime Saves More?
Scenario: Mr. Sharma, age 35, annual salary ₹15 lakh, investments ₹1.2 lakh under 80C, HRA ₹80,000
Old Regime Calculation:
- Taxable Income = 15,00,000 - 1,20,000 - 50,000 (standard) - 80,000 (HRA) = ₹12.5 lakh
- Tax = 5,000 + 1,00,000 + 37,500 = ₹1,42,500
- + cess = ₹1,48,200
New Regime Calculation:
- Taxable Income = ₹15 lakh
- Tax = 0 + 15,000 + 40,000 + 52,500 = ₹1,07,500
- + cess = ₹1,11,800
Verdict: New regime saves ₹35,400 annually for Mr. Sharma.
Tax Planning Tips for 2025-26
- Calculate before filing: Use our calculator to compare regimes before filing ITR.
- Maximize 80C investments: Reach ₹1.5 lakh limit in EPFO, PPF, mutual funds, FDs.
- Consider health insurance: 80D can save significant tax for family health plans.
- Tech investments: Check if employer offers NPS at exit extra 10% under new regime.
- Review mid-year: Salary changes may affect regime choice - recalculate quarterly.