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Every salaried Indian faces the same question at the start of every financial year — which tax regime saves me more money, and how much tax will I actually pay?

This free Income Tax Calculator for AY 2025-26 answers both instantly. Enter your salary, add all applicable deductions and see your tax liability under both the Old Regime and New Regime side by side. The calculator automatically tells you which one is better for you and by exactly how much.

How to Use the Income Tax Calculator

Step 1 — Select your tax regime Choose New Regime (default from FY 2024-25), Old Regime, or Compare Both. The New Regime has lower slab rates but no deductions. The Old Regime allows deductions under 80C, 80D, HRA and more.

Step 2 — Enter your income Enter your annual salary or total income. If you have multiple income sources such as rent, FD interest or freelance income, add them in the Other Income field.

Step 3 — Enter deductions (Old Regime only) If you chose Old Regime or Compare Both, enter your investments under Section 80C (PPF, ELSS, LIC, EPF contributions up to ₹1.5 lakh), health insurance premium under 80D, home loan interest under Section 24(b) and HRA exemption.

Step 4 — Read your results The calculator shows total tax, taxable income, effective tax rate, monthly tax and a slab-wise breakdown. In Compare Both mode, it highlights which regime saves more and by how much

New Tax Regime vs Old Tax Regime — Which is Better?

From FY 2023-24 the New Tax Regime became the default regime. However you can still opt for the Old Regime if it results in lower tax.

New Tax Regime slabs (AY 2025-26):

Income Slab Tax Rate
Up to ₹3,00,000 0%
₹3,00,001 to ₹7,00,000 5%
₹7,00,001 to ₹10,00,000 10%
₹10,00,001 to ₹12,00,000 15%
₹12,00,001 to ₹15,00,000 20%
Above ₹15,00,000 30%

New Regime also offers:

  • Standard deduction of ₹75,000 for salaried employees

  • No tax for income up to ₹7 lakh after rebate under Section 87A

Old Tax Regime slabs (AY 2025-26):

Income Slab Tax Rate
Up to ₹2,50,000 0%
₹2,50,001 to ₹5,00,000 5%
₹5,00,001 to ₹10,00,000 20%
Above ₹10,00,000 30%

Old Regime allows deductions including 80C (up to ₹1.5 lakh), 80D, HRA, LTA, 24(b) home loan interest and more.

Who should choose which regime?

New Regime is better if:

  • You have few or no investments

  • Your annual income is below ₹7 lakh (zero tax with rebate)

  • You do not have a home loan

  • You do not claim HRA

Old Regime is better if:

  • You claim large deductions under 80C (₹1.5 lakh), 80D and HRA

  • You have a home loan with significant interest payments

  • Your total deductions exceed ₹4 to ₹4.5 lakh

Key Tax Deductions You Should Know About

Section 80C — Up to ₹1,50,000: PPF contributions, ELSS mutual funds, life insurance premiums, EPF employee contributions, NSC, 5-year tax-saving FD, children's tuition fees, principal repayment of home loan, Sukanya Samriddhi Yojana.

Section 80D — Health Insurance: Up to ₹25,000 for health insurance premiums (₹50,000 for senior citizens). Additional ₹25,000 for parents' health insurance (₹50,000 if parents are senior citizens). Maximum total deduction: ₹1 lakh for senior citizen assesses with senior citizen parents.

Section 24(b) — Home Loan Interest: Up to ₹2,00,000 per year on interest paid on home loan for self-occupied property. No limit for let-out property subject to overall income set-off rules.

HRA (House Rent Allowance): Exempt from tax for salaried employees who pay rent and receive HRA. The exemption is the minimum of: actual HRA received, 50% of salary (40% for non-metro), or actual rent paid minus 10% of salary.

Section 80CCD(1B) — NPS: Additional ₹50,000 deduction for contributions to National Pension System over and above the ₹1.5 lakh 80C limit.

Standard Deduction: ₹50,000 in Old Regime and ₹75,000 in New Regime — a flat deduction available to all salaried employees and pensioners.

Understanding Health and Education Cess

A 4% Health and Education Cess is levied on the total income tax payable. This cess goes towards government health and education programs.

Example: Income tax calculated: ₹1,00,000 Health and Education Cess at 4% = ₹4,000 Total tax payable = ₹1,04,000

The cess is applied after calculating the basic tax and any applicable surcharge. Our calculator automatically adds the 4% cess to your total tax figure.

When Does Surcharge Apply?

A surcharge is an additional tax on income tax for high-income earners:

Total Income Surcharge Rate
Up to ₹50 lakh Nil
₹50 lakh to ₹1 crore 10%
₹1 crore to ₹2 crore 15%
₹2 crore to ₹5 crore 25% (Old) / 25% (New)
Above ₹5 crore 37% (Old) / 25% (New)

The surcharge is applied on the income tax amount before cess. This is why effective tax rates for very high earners can exceed 35%.

Frequently Asked Questions

Q1. How much tax do I pay on ₹10 lakh salary in 2025-26? Under the New Regime with standard deduction of ₹75,000, your taxable income is ₹9,25,000. Tax = ₹5,000 (5% on ₹3-7L) + ₹22,500 (10% on ₹7-9.25L) = ₹27,500 + 4% cess = approximately ₹28,600. Under the Old Regime with 80C and 80D deductions of ₹1.75 lakh, taxable income falls to approximately ₹7.75 lakh with tax of around ₹75,000. New Regime is better for this income level.

Q2. Is there zero tax on income up to ₹7 lakh in 2026? Yes, under the New Tax Regime, if your total income is ₹7 lakh or below (after standard deduction of ₹75,000, meaning gross salary up to ₹7.75 lakh), you pay zero tax due to the Section 87A rebate of up to ₹25,000. This is one of the biggest benefits of the New Regime for middle-income earners.

Q3. What is Section 87A rebate? Section 87A provides a tax rebate to individual taxpayers. Under the New Regime for AY 2025-26, if your net taxable income is ₹7 lakh or below, you get a full rebate meaning zero tax payable. Under the Old Regime, the rebate applies if income is ₹5 lakh or below.

Q4. How is TDS on salary calculated? Your employer calculates estimated annual tax liability and divides by 12 to deduct monthly TDS. You declare your investment proofs and deductions to your employer at the start of the year. If actual tax is higher than TDS deducted, you pay the balance when filing ITR. If TDS is higher, you get a refund.

Q5. What is the last date to file income tax return for AY 2025-26? The last date for filing ITR for AY 2025-26 (FY 2024-25) for individuals without audit requirement is 31 July 2025. For individuals with audit requirement it is 31 October 2025. Late filing attracts penalty of ₹5,000 (reduced to ₹1,000 if income is below ₹5 lakh).

Q6. What happens if I do not file ITR? Not filing ITR can result in a notice from the Income Tax Department, penalty under Section 234F (₹5,000 for late filing), interest on unpaid tax under Section 234A, 234B and 234C, inability to carry forward certain losses, and complications in visa applications and loan processing.

Q7. Can I switch between New and Old Regime every year? Salaried individuals can switch between New and Old Regime every year at the time of filing ITR. Business owners can switch only once from Old to New Regime and cannot switch back. Choose wisely based on your deductions and tax liability each year.

Q8. What deductions are allowed in the New Tax Regime? The New Regime allows very few deductions — Standard Deduction of ₹75,000, employer NPS contribution under Section 80CCD(2), agniveer corpus fund deductions and gratuity and leave encashment exemptions. Most deductions under 80C, 80D, HRA and home loan interest are not available in the New Regime.

Q9. How does home loan save tax? Under the Old Regime, home loan borrowers can claim deduction on interest paid under Section 24(b) up to ₹2 lakh per year for self-occupied property. Additionally, principal repayment qualifies under Section 80C up to ₹1.5 lakh. Combined these two deductions can save ₹3.5 lakh per year in taxable income — saving ₹1,05,000 in tax for someone in the 30% bracket.

Q10. What is the income tax on capital gains from mutual funds in 2026? Short-term capital gains (held less than 1 year) on equity mutual funds are taxed at 20% (revised from 15% in Budget 2024). Long-term capital gains (held more than 1 year) on equity mutual funds exceeding ₹1.25 lakh per year are taxed at 12.5% (revised from 10%). Debt mutual fund gains are taxed as per income slab rate regardless of holding period.