Old vs New Tax Regime Calculator
Deciding between the Old and New tax regimes involves evaluating your income level and the deductions you potentially claim. For FY 2025-26, the New Tax Regime is the default. This tool provides an indicative side-by-side evaluation based on Section 115BAC and general deduction rules.
Which Tax Regime is Better for You? A Complete 2026 Analysis
The choice between the Old and New Tax Regimes is the most important tax decision salaried Indians make every year. Under the Finance Act 2025, the New Regime has been made the default — but that doesn't mean it's right for everyone. This guide walks you through the exact math so you can make the right call.
1. Tax Slabs Compared Side-by-Side (FY 2025-26)
| Income Range | New Regime Rate | Old Regime Rate |
|---|---|---|
| Up to ₹4,00,000 | Nil | Nil (up to ₹2.5L) |
| ₹4,00,001 – ₹8,00,000 | 5% | 5% |
| ₹8,00,001 – ₹12,00,000 | 10% | 20% |
| ₹12,00,001 – ₹16,00,000 | 15% | 30% |
| ₹16,00,001 – ₹20,00,000 | 20% | 30% |
| ₹20,00,001 – ₹24,00,000 | 25% | 30% |
| Above ₹24,00,000 | 30% | 30% |
Source: Income Tax Department — Tax Slabs FY 2025-26
2. The ₹12 Lakh Zero-Tax Benefit Explained (Section 87A)
The most important feature of the New Regime in FY 2025-26 is the Section 87A rebate. If your net taxable income is up to ₹12,00,000, the entire tax calculated is waived off. For salaried individuals, the ₹75,000 Standard Deduction means you can earn up to ₹12,75,000 gross salary and pay zero tax.
Important caveat: If your income exceeds ₹12 lakh by even ₹1, the rebate is lost and you pay full tax. Marginal relief is available at the boundary, but typically ₹12L is the last income point with zero tax.
3. The Old Regime Deduction Advantage
The Old Regime (optional from FY 2025-26) lets you reduce taxable income using multiple exemptions and deductions. The most impactful ones are:
- Section 80C: Up to ₹1,50,000 (EPF, PPF, ELSS, LIC, home loan principal)
- HRA Exemption (Rule 2A): Can reduce income by ₹1–3 lakh if you live in rented accommodation
- Section 24(b): Up to ₹2,00,000 interest on home loan (self-occupied property)
- Section 80D: Up to ₹25,000 (₹50,000 for seniors) on medical insurance
- Standard Deduction: ₹50,000 in Old Regime (vs ₹75,000 in New Regime)
4. The Breakeven Point: When Does Old Regime Win?
The Old Regime becomes beneficial when your total deductions exceed the 'Breakeven Deduction' — the point where both regimes produce the same tax. Here are approximate breakeven amounts by income level:
| Gross Salary | Breakeven Deductions Needed | Verdict if Deductions Below Breakeven |
|---|---|---|
| ₹5,00,000 | N/A (New = Zero tax via 87A) | New Regime always better |
| ₹8,00,000 | ~₹1,25,000 | New Regime likely better |
| ₹10,00,000 | ~₹2,00,000 | Close — calculate with tool above |
| ₹15,00,000 | ~₹3,75,000 | Old Regime if you max 80C + HRA + 80D |
| ₹20,00,000 | ~₹4,50,000+ | Old Regime with home loan interest |
5. Key Statutory Rules This Calculator Uses
- Rule 2A (HRA): Exemption is the minimum of (Actual HRA received, Rent paid minus 10% of Basic, or 40/50% of Basic for Non-Metro/Metro).
- Section 87A: Full tax rebate if net taxable income ≤ ₹12,00,000 (New Regime) or ≤ ₹5,00,000 (Old Regime).
- Health & Education Cess: Mandatory 4% cess on the final tax in both regimes.
- Surcharge: Applicable at 10% (₹50L–₹1Cr income), 15% (₹1Cr–₹2Cr), 25% (₹2Cr–₹5Cr), 37% (₹5Cr+). Our calculator includes surcharge calculations.
For a deeper dive into the slab-by-slab comparison with examples, read our comprehensive Old vs New Tax Regime Guide 2026.
Frequently Asked Questions
Can I switch between regimes every year?
Yes, for salaried individuals, you can choose the regime every year while filing ITR. For business owners, the choice is limited to once in a lifetime.
Is the ₹75,000 Standard Deduction available in both regimes?
No. For FY 2025-26, the Standard Deduction is ₹75,000 in the New Regime and ₹50,000 in the Old Regime.
What is the 'Breakeven Deduction'?
It is the amount of deduction required in the Old Regime to make your tax liability equal to that of the New Regime. If your deductions are higher than this point, the Old Regime is better.
Where can I find a detailed slab-wise comparison guide?
Check our Detailed Comparison Guide for a side-by-side break-up of slabs, rebates, and exclusions.
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Indicative Methodology & Fact-Check: This evaluator is based on the logic of the Finance Act 2025 and Section 115BAC. Results are indicative and for informational purposes only. This does not constitute professional tax advice. Always consult a Chartered Accountant for final tax planning and compliance.