Old vs New Tax Regime Calculator (FY 2025-27)
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?
The choice between Old and New regimes is a trade-off between lower rates (New) and higher deductions (Old). Under the Finance Act 2025, the New Regime has been further sweetened to encourage adoption.
1. The New Tax Regime (Default)
The New Regime (Sec 115BAC) has no deductions (except Standard Deduction of ₹75,000) but offers significant rebates. For individuals earning up to ₹12 Lakh taxable income, the tax is effectively zero due to the Section 87A rebate.
2. The Old Tax Regime (Optional)
The Old Regime allows you to reduce your taxable income using common exemptions like Section 80C, HRA, and 80D. It usually becomes beneficial if your total deductions exceed the 'Breakeven Point' (approx. ₹3.5L to ₹4.5L depending on income).
Key Statutory Rules
- Rule 2A (HRA): Exemption is the minimum of (Actual HRA, Rent minus 10% of Basic, or 40/50% of Basic).
- Section 87A: Provides rebate to ensure tax-free income up to ₹12L (New) or ₹5L (Old).
- Health & Education Cess: A mandatory 4% cess is applied on the tax amount in both regimes.
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.
Recommended Eligibility Tools
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.