Income Tax Calculator India 2026: New vs Old Regime, Slabs & How to Save Tax
📅 May 2026⏱ 12 min read✍️ ToolLoom Editorial
FY 2025-26 brought significant changes to India's tax structure — a revamped new regime with lower rates, a higher zero-tax limit of ₹12 lakh, and a larger standard deduction. This guide walks through every tax slab, the new vs old regime comparison, and exactly how to calculate your tax liability — with worked examples.
The new tax regime is now the default regime in India. It offers lower rates but no major deductions (except standard deduction). For FY 2025-26, the slabs were significantly revised to make the new regime more attractive:
Income Slab
Tax Rate
Tax on Slab
Cumulative Tax
Up to ₹4,00,000
Nil
₹0
₹0
₹4,00,001 – ₹8,00,000
5%
₹20,000
₹20,000
₹8,00,001 – ₹12,00,000
10%
₹40,000
₹60,000
₹12,00,001 – ₹16,00,000
15%
₹60,000
₹1,20,000
₹16,00,001 – ₹20,00,000
20%
₹80,000
₹2,00,000
₹20,00,001 – ₹24,00,000
25%
₹1,00,000
₹3,00,000
Above ₹24,00,000
30%
On balance
₹3,00,000 + 30% above ₹24L
✅
Zero tax up to ₹12.75 lakh for salaried employees: Section 87A provides a rebate of up to ₹60,000 for individuals with taxable income up to ₹12 lakh — making their tax liability zero. Salaried employees also get a standard deduction of ₹75,000, meaning a gross salary of up to ₹12,75,000 results in zero income tax under the new regime.
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Standard deduction under new regime: ₹75,000 for salaried employees and pensioners. This is deducted automatically — no documentation required. It brings your taxable income down by ₹75,000 before the slabs are applied.
Old Tax Regime Slabs
The old regime has not changed in several years. It has higher rates but allows a wide range of deductions and exemptions that can significantly reduce taxable income for those with the right financial profile.
Income Slab
Below 60 Years
Senior Citizen (60–79)
Super Senior (80+)
Up to ₹2,50,000
Nil
Nil
Nil
₹2,50,001 – ₹3,00,000
5%
Nil
Nil
₹3,00,001 – ₹5,00,000
5%
5%
Nil
₹5,00,001 – ₹10,00,000
20%
20%
20%
Above ₹10,00,000
30%
30%
30%
Standard deduction under old regime: ₹50,000 for salaried employees. Section 87A rebate up to ₹12,500 for income up to ₹5 lakh.
How to Calculate Your Income Tax
Follow these steps to calculate your exact tax liability under the new regime for FY 2025-26:
📌 Example: Salaried employee with ₹15,00,000 gross salary (New Regime)
Step 1 — Gross Salary: ₹15,00,000
Step 2 — Standard Deduction: − ₹75,000 → Taxable Income = ₹14,25,000
✅ Total Tax Payable = ₹93,750 + ₹3,750 = ₹97,500 | Effective Rate = 6.5% of gross salary
📌 Example: Same ₹15L salary but with HRA + 80C deductions (Old Regime)
Gross Salary: ₹15,00,000
Standard Deduction: − ₹50,000
HRA Exemption: − ₹1,20,000 (assumed)
Section 80C: − ₹1,50,000
Section 80D (health insurance): − ₹25,000
Taxable Income = ₹15,00,000 − ₹3,45,000 = ₹11,55,000
Tax: ₹0 (up to ₹2.5L) + ₹12,500 (₹2.5–5L at 5%) + ₹1,31,000 (₹5–11.55L at 20%) = ₹1,43,500
Cess (4%): ₹5,740
✅ Total Tax (Old Regime) = ₹1,49,240 — More than new regime (₹97,500) in this case
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This example shows new regime saving more. Whether old or new regime saves more depends entirely on your specific deductions. Always calculate both before filing — the difference can be lakhs for higher incomes.
New vs Old Regime — Which is Better for You?
✅ New Regime — Choose If...
Your total deductions are below ₹3.5 lakh
You don't have HRA or home loan interest deductions
Your income is below ₹12.75 lakh (zero tax!)
You prefer simplicity and fewer investments
You are a first-time taxpayer
You don't have 80C investments fully utilised
💡 Old Regime — Choose If...
Total deductions exceed ₹3.5 lakh
You pay high rent and claim HRA
You have a home loan with large interest component
You fully utilise 80C (₹1.5L) + 80D + NPS
Your income is above ₹20 lakh with heavy deductions
You are in 30% bracket with maximum investments
Annual Income
New Regime Tax
Old Regime Tax (max deductions)
Better Choice
₹8,00,000
₹20,000 + cess
₹75,000 + cess (before deductions)
New Regime
₹12,00,000
₹0 (87A rebate)
₹1,12,500 + cess (before deductions)
New Regime
₹15,00,000
₹97,500 (with std ded)
Depends on deductions
Calculate Both
₹20,00,000
₹2,08,000 (with std ded)
Less if deductions > ₹4.5L
Calculate Both
₹30,00,000
₹5,08,000 (with std ded)
Less if deductions > ₹5L
Calculate Both
Key Deductions Under the Old Regime
These deductions are only available under the old tax regime — they cannot be claimed if you opt for the new regime:
Section 80C
₹1,50,000
PPF, ELSS, EPF, life insurance premium, NSC, 5-year FD, tuition fees, home loan principal
Section 80D
₹25,000+
Health insurance premium. ₹25K for self/family, ₹50K if parents are senior citizens. Max ₹1L total.
Section 80CCD(1B)
₹50,000
Additional NPS contribution over and above 80C limit. One of the most underutilised deductions.
Section 24(b)
₹2,00,000
Home loan interest on self-occupied property. One of the largest deductions for home loan holders.
HRA Exemption
Calculated
Lowest of: actual HRA received, 50%/40% of basic salary (metro/non-metro), or rent paid minus 10% of basic.
Section 80TTA/TTB
₹10,000 / ₹50,000
Interest on savings account (₹10K for regular, ₹50K for senior citizens on all deposits).
HRA Exemption — How to Calculate
House Rent Allowance (HRA) is one of the most valuable exemptions under the old regime. The exempt amount is the lowest of these three values:
Actual HRA received from employer
50% of basic salary (for metro cities — Delhi, Mumbai, Kolkata, Chennai) or 40% (all other cities)
Rent paid minus 10% of basic salary
📌 HRA Example: Basic Salary ₹6L/yr | HRA Received ₹2.4L | Rent Paid ₹3L | Metro City
Option A — Actual HRA received: ₹2,40,000
Option B — 50% of Basic (metro): 50% × ₹6,00,000 = ₹3,00,000
Option C — Rent − 10% of Basic: ₹3,00,000 − ₹60,000 = ₹2,40,000
✅ HRA Exemption = Lowest = ₹2,40,000 (Options A and C are equal here)
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Rent receipts and landlord PAN: If annual rent exceeds ₹1 lakh, you must submit your landlord's PAN to your employer for HRA exemption. If the landlord doesn't have a PAN, collect a declaration from them. Without proper documentation, your employer may not grant the exemption and will deduct higher TDS.
Surcharge and Health & Education Cess
In addition to the base income tax, higher earners pay a surcharge and everyone pays a 4% cess:
Income Range
Surcharge Rate (New Regime)
Surcharge Rate (Old Regime)
Up to ₹50 lakh
Nil
Nil
₹50 lakh – ₹1 crore
10%
10%
₹1 crore – ₹2 crore
15%
15%
₹2 crore – ₹5 crore
25%
25%
Above ₹5 crore
25%
37%
Health & Education Cess of 4% is applied on the total of (income tax + surcharge) for all taxpayers — regardless of income level. There is no exemption from cess.
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Marginal relief on surcharge: If your income crosses the ₹50 lakh or ₹1 crore threshold by a small amount, marginal relief ensures your additional tax does not exceed your additional income. This prevents effective tax rates from exceeding 100% at the threshold boundaries.
Legal Ways to Save Tax in 2026
Strategy
Section
Max Deduction
Regime
PPF investment
80C
₹1,50,000
Old only
ELSS mutual fund (tax-saving)
80C
₹1,50,000
Old only
NPS (additional contribution)
80CCD(1B)
₹50,000
Old only
Health insurance premium
80D
₹75,000
Old only
Home loan interest (self-occupied)
24(b)
₹2,00,000
Old only
HRA exemption (salaried, renting)
10(13A)
Calculated
Old only
Standard deduction
16(ia)
₹75,000 (new) / ₹50,000 (old)
Both
NPS employer contribution
80CCD(2)
10% of salary (no cap)
Both
Leave Travel Allowance (LTA)
10(5)
Actual travel cost
Old only
Education loan interest
80E
No limit (8 years)
Old only
✅
Available in both regimes: Standard deduction (₹75K new / ₹50K old) and employer NPS contribution under Section 80CCD(2) are available under both regimes. If your employer offers NPS matching, maximising 80CCD(2) is beneficial regardless of which regime you choose.
📋 Calculate Your Income Tax Instantly
Free income tax calculator for FY 2025-26 — compare new vs old regime, see your exact tax liability, and find which regime saves you more. No signup needed.
Under the new tax regime for FY 2025-26: 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%. Add 4% Health & Education Cess on computed tax. The Section 87A rebate (up to ₹60,000) means zero tax for income up to ₹12 lakh. Salaried employees get an additional standard deduction of ₹75,000, making the effective zero-tax limit ₹12.75 lakh.
It depends on your deductions. If your total deductions (80C + HRA + home loan interest + 80D + others) exceed approximately ₹3.5 lakh, the old regime may save more tax. If your deductions are lower, or if your income is below ₹12.75 lakh, the new regime is almost certainly better — you pay zero tax. Always calculate your tax under both regimes before making the choice for the year.
The standard deduction for salaried employees is ₹75,000 under the new tax regime for FY 2025-26. Under the old regime, the standard deduction is ₹50,000. The standard deduction requires no documentation or investment — it is automatically deducted from your gross salary before computing taxable income and TDS.
Under the new tax regime for FY 2025-26, individuals with taxable income up to ₹12 lakh pay zero tax due to the Section 87A rebate of up to ₹60,000. For salaried employees who get a standard deduction of ₹75,000, this means a gross salary of up to ₹12,75,000 results in zero income tax. Note: capital gains and other special-rate incomes may still attract tax even if regular income is below ₹12 lakh.
Section 80C allows deductions up to ₹1,50,000 per year on eligible investments including PPF, ELSS, EPF (employee contribution), life insurance premiums, NSC, 5-year tax-saving FDs, tuition fees for children, and home loan principal repayment. The tax saving from 80C depends on your bracket: ₹46,800 in the 30% bracket, ₹31,200 in the 20% bracket, ₹15,600 in the 10% bracket — before cess. This deduction is only available under the old tax regime.
Surcharge is an additional levy on income tax for higher earners: 10% on income between ₹50 lakh and ₹1 crore; 15% on ₹1–2 crore; 25% on ₹2 crore and above under the new regime (and on ₹2–5 crore under old regime; 37% above ₹5 crore under old regime). Health & Education Cess of 4% is then applied on the total of (tax + surcharge) for everyone regardless of income level.
Salaried individuals and those without business income can switch between old and new tax regimes every financial year by choosing at the time of ITR filing. However, individuals with business or professional income (freelancers, consultants, business owners) can opt out of the new regime only once. Once they switch back to the old regime, they cannot switch to the new regime again (except by permanently ceasing business activity).