Income Tax Calculator FY 2025-26 – Compare Old & New Tax Regime

Income Tax Calculator for FY 2025-26

WealthToolsHub's free Income Tax Calculator helps you calculate your exact income tax liability for Financial Year 2025-26 (Assessment Year 2026-27). Enter your annual income, age group, and applicable deductions to instantly compare your tax payable under both the old and new tax regimes — and find out which one saves you more money.

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

The biggest financial decision for salaried individuals in India today is choosing between the old and new tax regime. The new tax regime offers lower slab rates and a higher rebate (income up to ₹12 lakh is effectively tax-free), but does not allow most deductions. The old tax regime has higher slab rates but allows deductions under Section 80C, HRA, home loan interest, health insurance, and more.

As a general rule — if your total deductions exceed ₹3.75 lakh, the old regime may save more tax. If your deductions are below this threshold, the new regime is likely better. Use our calculator above to get the exact comparison for your income.

Key Deductions Under the Old Tax Regime

Section 80C – Up to ₹1,50,000

The most popular tax deduction in India. Includes PPF, ELSS mutual funds, NSC, life insurance premiums, home loan principal repayment, EPF contribution, ULIP, Sukanya Samriddhi Yojana, and children's tuition fees.

HRA – House Rent Allowance

If you pay rent and receive HRA from your employer, you can claim exemption on the minimum of: actual HRA received, 50% of basic salary (metro) or 40% (non-metro), and actual rent paid minus 10% of basic salary.

Section 24(b) – Home Loan Interest

Interest paid on a home loan for a self-occupied property is deductible up to ₹2,00,000 per year under Section 24(b) of the Income Tax Act.

Section 80D – Health Insurance

Premium paid for health insurance is deductible up to ₹25,000 for self, spouse, and children. An additional ₹25,000 (₹50,000 for senior citizens) is allowed for parents' health insurance.

Standard Deduction

Salaried employees get a flat standard deduction of ₹50,000 under the old regime and ₹75,000 under the new regime — no proof required.

New Tax Regime – Key Features for FY 2025-26

The new tax regime has been made the default regime from FY 2023-24. Key benefits include lower tax slabs starting from 5%, a standard deduction of ₹75,000, and an enhanced rebate under Section 87A making income up to ₹12 lakh completely tax-free for resident individuals. However, most exemptions and deductions are not available under this regime.

How is Income Tax Calculated in India?

Income tax in India is calculated on your total taxable income after deducting applicable exemptions and deductions. The tax is computed slab-wise — different portions of your income are taxed at different rates. A health and education cess of 4% is added on the total tax payable. Surcharge is applicable for income above ₹50 lakh.

Tips to Save Income Tax in India

• Maximise Section 80C investments (PPF, ELSS, LIC) up to ₹1,50,000 under old regime
• Invest ₹50,000 in NPS for additional deduction under Section 80CCD(1B)
• Pay health insurance premium for self and parents to claim 80D deduction
• Claim HRA exemption if you live in rented accommodation
• Use our calculator every year to compare both regimes before filing your ITR

Also try: Use our PPF Calculator to plan your 80C investments, our SIP Calculator for ELSS mutual fund planning, or our EMI Calculator for home loan planning.

Frequently Asked Questions (FAQs)

1. What is the income tax exemption limit for FY 2025-26?

Under the new tax regime, income up to ₹12 lakh is effectively tax-free due to rebate under Section 87A. Under the old regime, the basic exemption limit is ₹2.5 lakh (₹3 lakh for senior citizens).

2. Which is better — old or new tax regime?

If your total deductions are high (₹3.75L+), the old regime may save more. If deductions are low, the new regime with lower slabs is usually better. Use our calculator above to compare.

3. What is the standard deduction for FY 2025-26?

₹75,000 under the new regime and ₹50,000 under the old regime for salaried employees and pensioners.

4. What deductions are available under Section 80C?

Section 80C allows up to ₹1,50,000 deduction for PPF, ELSS, NSC, LIC, home loan principal, tuition fees, and more — only under the old regime.

5. Is HRA exempt from income tax?

HRA exemption is available only under the old tax regime. The exempt amount is the minimum of actual HRA, 50%/40% of basic salary, and actual rent minus 10% of basic salary.

6. What is the surcharge on income tax?

Surcharge applies on income above ₹50 lakh — 10% for ₹50L–₹1Cr, 15% for ₹1Cr–₹2Cr, 25% for ₹2Cr–₹5Cr, and 37% above ₹5Cr (old regime). Max surcharge under new regime is 25%.