Every working Indian faces the same question at the start of every financial year: which tax regime saves more money — the New Regime or the Old Regime? The government changed the rules again for FY 2025-26, and the new slabs make the New Regime more attractive than ever for most salaried employees. Our free Income Tax Calculator India does the comparison instantly — enter your salary, deductions, and get a side-by-side result in seconds.
New Tax Regime Slabs for FY 2025-26 (AY 2026-27)
The New Regime has been significantly sweetened for FY 2025-26. The standard deduction has been increased to Rs 75,000 (up from Rs 50,000), and the rebate under Section 87A now makes income up to Rs 7 lakh completely tax-free. The slabs are: nil up to Rs 3 lakh, 5% from Rs 3-7 lakh, 10% from Rs 7-10 lakh, 15% from Rs 10-12 lakh, 20% from Rs 12-15 lakh, and 30% above Rs 15 lakh.
Old Tax Regime — Still Worth It for High Deductions
The Old Regime remains beneficial for taxpayers with large deductions — specifically those who maximise Section 80C (Rs 1.5 lakh), claim HRA exemption, pay home loan interest under Section 24(b), invest in NPS under Section 80CCD(1B), and have high health insurance premiums under Section 80D. If your total deductions exceed Rs 3.75 lakh, the Old Regime often still wins.
How to Use the Income Tax Calculator
- Enter your Basic Salary, HRA, allowances, and bonus
- Fill in your Old Regime deductions — 80C, 80D, HRA exemption, home loan interest
- Select your city (metro or non-metro) for HRA calculation
- Click Calculate and instantly see New Regime vs Old Regime tax side by side
- The tool highlights the better option and shows exactly how much you save
Key Changes in FY 2025-26
- New Regime standard deduction raised to Rs 75,000 — up from Rs 50,000 in FY 2024-25
- Section 87A rebate extended — income up to Rs 7 lakh is fully tax-free under the New Regime
- New Regime is now the default — you must explicitly opt out to use the Old Regime
- 4% Health and Education Cess continues to apply on the total computed tax
Who Should Choose the New Regime?
The New Regime is best for: employees with income below Rs 7 lakh (zero tax), those with few deductions (no HRA, no home loan, minimal 80C investments), employees who prefer simplicity over tax planning, and young professionals early in their career who do not yet have large investments or liabilities. For most salaried employees earning below Rs 15 lakh with standard deductions, the New Regime now saves more tax.
Who Should Stick with the Old Regime?
The Old Regime still wins for taxpayers who: pay significant rent and claim HRA exemption, have a home loan with substantial interest repayment, maximise all 80C investments and have additional 80CCD(1B) NPS contributions, and have high health insurance premiums for family coverage. If your combined deductions and exemptions exceed Rs 3.75 lakh, run both calculations before deciding.
Calculate Your Tax Now
Stop guessing which regime saves more. Open our free Income Tax Calculator India, enter your details, and get the New Regime vs Old Regime comparison instantly. No login, no ads, completely free.
