Compare New vs Old regime tax liability with latest Budget 2025 updates and deductions.
This calculator is for illustrative purposes based on the Union Budget 2025-26 proposals. It includes the 4% health and education cess.
The New Tax Regime is now the default option and offers lower tax rates but fewer deductions. The Old Tax Regime allows for several exemptions (HRA, LTA) and deductions (80C, 80D), making it beneficial for those with high home loan interest or large investments.
Tax planning is an essential part of financial management in India. With the introduction of multiple tax regimes and frequent budget updates, choosing the right way to file your taxes can save you thousands of rupees. Our Income Tax Calculator is updated with the latest Union Budget 2024 changes, allowing you to compare the Old vs. New Tax Regime for the Financial Year 2025-26.
Taxable Income = Gross Income - Standard Deduction - Section 80C/80D Deductions (if applicable)
This calculator utilizes standard mathematical formulas audited and verified by our team of Tax Consultants & Chartered Accountants (CA) to ensure mathematical precision and compliance.
The New Tax Regime is now the default option. It offers lower slab rates and a higher Standard Deduction of ₹75,000 (increased from ₹50,000). However, it does not allow most deductions like 80C, 80D, or HRA. The Old Tax Regime allows you to claim multiple deductions but has higher tax rates. Generally, if your total deductions are less than ₹3.75 Lakhs, the New Regime is likely more beneficial.
One of the most attractive features of the New Regime is the tax rebate. Individuals with a taxable income up to ₹7 Lakhs pay zero income tax. In the Old Regime, this rebate is available for income up to ₹5 Lakhs. This makes the New Regime highly suitable for middle-income earners who don't have large investments.
If you choose the Old Regime, you can reduce your taxable income using: 1) Section 80C (up to ₹1.5 Lakhs in PPF, ELSS, LIC). 2) Section 80D (Health Insurance premiums). 3) Section 24(b) (Home Loan interest up to ₹2 Lakhs). 4) HRA (House Rent Allowance) if you live in a rented house.
The standard deduction is a flat amount deducted from your gross salary before calculating tax. For FY 2025-26, this has been increased to ₹75,000 for those under the New Tax Regime. Pensioners also qualify for this deduction, providing much-needed relief to senior citizens.
Calculating tax for a typical professional with no investments.
Seeing which regime wins at higher income levels.
The New Tax Regime is the default regime. If you wish to use the Old Regime, you must explicitly opt for it while filing your ITR.
It's a tax credit that makes your tax liability zero if your total income is below the specified threshold (₹7L for New Regime, ₹5L for Old).
Yes, the employer's contribution to NPS under Section 80CCD(2) is allowed as a deduction in both regimes.
Salaried individuals can switch between regimes every year. However, individuals with business income can only switch once in their lifetime.
It is an additional tax of 4% calculated on the total income tax payable, used by the government for health and education initiatives.
No, House Rent Allowance (HRA) exemption is not available in the New Tax Regime.
Under the Old Regime, you can claim up to ₹1.5 Lakhs by investing in PPF, ELSS, NPS, or paying school fees/life insurance premiums.
In the Old Regime, the basic exemption limit is ₹3 Lakhs for those aged 60-80, and ₹5 Lakhs for those above 80. In the New Regime, it's uniform at ₹3 Lakhs for all.
You will have to pay a late fee under Section 234F (up to ₹5,000) and interest on the unpaid tax amount.
Surcharge is an additional tax for high-income earners (usually above ₹50 Lakhs), ranging from 10% to 25% of the tax amount.