Old vs New Tax Regime Calculator

Old vs New Tax Regime Calculator: which one saves you more?

Since the Budget 2020 reforms, every Indian income-tax payer effectively chooses between two systems. The old regime keeps higher slab rates but lets you claim a long list of deductions and exemptions. The new regime offers wider, lower slabs but strips away most of those deductions. This calculator computes your tax liability under both, side by side, so you can see the actual rupee difference for your own income and pick the cheaper option before you file or before you declare your choice to your employer.

Who this is for

It is meant for salaried employees, pensioners, freelancers and small business owners who want a quick, honest comparison rather than a guess. It is especially useful if you have home-loan interest, a big 80C corpus, HRA, or NPS contributions, because those are exactly the deductions the new regime removes. If you have almost no deductions, the answer is usually the new regime; if you claim a lot, the maths is closer and worth checking.

The formula in words

For each regime the logic is the same three steps. First, Taxable income = Gross income minus allowed deductions. In the old regime the allowed set is large (standard deduction of Rs. 50,000, 80C, 80D, HRA, home-loan interest under section 24, NPS under 80CCD(1B), and more). In the new regime almost the only salaried deduction is the standard deduction of Rs. 75,000, plus the employer's NPS contribution under 80CCD(2).

Second, apply the slab rates for that regime to the taxable income, band by band. Third, apply the section 87A rebate if you qualify, then add the 4% Health and Education Cess on the tax after rebate (and surcharge on very high incomes). The final figures are compared and the lower one is your better regime.

A fully worked example (FY 2025-26)

Take a salaried person with gross salary of Rs. 15,00,000 who claims these old-regime deductions: standard deduction Rs. 50,000, 80C Rs. 1,50,000, 80D Rs. 25,000, NPS 80CCD(1B) Rs. 50,000, and HRA exemption Rs. 1,50,000 — total Rs. 4,25,000.

Old regime:

• Taxable income = 15,00,000 minus 4,25,000 = Rs. 10,75,000
• Up to Rs. 2,50,000: nil
• Rs. 2,50,000 to 5,00,000 at 5% = Rs. 12,500
• Rs. 5,00,000 to 10,00,000 at 20% = Rs. 1,00,000
• Rs. 10,00,000 to 10,75,000 at 30% = Rs. 22,500
• Tax = Rs. 1,35,000; add 4% cess Rs. 5,400; total = Rs. 1,40,400

New regime (standard deduction Rs. 75,000, no other deductions):

• Taxable income = 15,00,000 minus 75,000 = Rs. 14,25,000
• Up to Rs. 4,00,000: nil
• Rs. 4,00,000 to 8,00,000 at 5% = Rs. 20,000
• Rs. 8,00,000 to 12,00,000 at 10% = Rs. 40,000
• Rs. 12,00,000 to 14,25,000 at 15% = Rs. 33,750
• Tax = Rs. 93,750; add 4% cess Rs. 3,750; total = Rs. 97,500

The new regime is cheaper by Rs. 42,900 here — even though this person claims fairly generous deductions. That is the practical impact of the widened new-regime slabs and the higher standard deduction.

Rules and edge cases (as of FY 2025-26)

• The new regime is the default. You must actively opt for the old regime, and salaried taxpayers can switch each year at the time of filing.
• New-regime slabs for FY 2025-26 are nil up to Rs. 4 lakh, then 5%, 10%, 15%, 20% and 25% in Rs. 4 lakh bands, and 30% above Rs. 24 lakh. Old-regime slabs remain nil up to Rs. 2.5 lakh, then 5%, 20% and 30%.
• The section 87A rebate makes tax nil for taxable income up to Rs. 12 lakh in the new regime (rebate up to Rs. 60,000) and up to Rs. 5 lakh in the old regime (rebate up to Rs. 12,500). With the Rs. 75,000 standard deduction, a salaried person can have nil tax up to roughly Rs. 12.75 lakh gross under the new regime. The rebate does not apply to income taxed at special rates, such as most capital gains.
• Business owners who opt out of the new regime generally cannot switch back and forth every year, unlike salaried individuals — so choose carefully.
• These slabs, the rebate and the standard deduction are set annually in the Union Budget and can change; always confirm against the current Finance Act before filing.

Tax treatment notes

Deductions like 80C, 80D, HRA and section 24 home-loan interest only reduce tax under the old regime. If you move to the new regime, contributions such as PPF, ELSS or life insurance still grow as before — you simply lose the deduction. Employer NPS under 80CCD(2) is one of the few deductions that survives in the new regime, which can tilt the decision for those with a strong NPS component. At very high incomes a surcharge applies, though the new regime caps the top surcharge at 25% instead of 37%.

Common mistakes

• Comparing tax on gross income without subtracting the standard deduction in both regimes.
• Forgetting the 4% cess, which quietly adds to both totals.
• Assuming the old regime always wins because of deductions — with the FY 2025-26 slabs, the new regime often wins even for people with a full 80C.
• Ignoring the 87A rebate thresholds, which can make the new regime nil-tax where the old regime still charges.
• Locking into the old regime as a business owner without realising the switch-back restriction.

Use this tool as a first pass, then confirm final figures with your Form 16 or a chartered accountant before you file.

Frequently asked questions

Which regime is the default if I do nothing?

The new regime is the default from FY 2023-24 onwards. If you want the old regime, you must actively choose it, either in your employer's declaration or at the time of filing your return.

Can I switch between the old and new regime every year?

Salaried individuals and pensioners can choose afresh each financial year when filing. Taxpayers with business or professional income can generally opt out of the new regime only once and switch back only once, so they should decide carefully.

Up to what income is there zero tax under the new regime for FY 2025-26?

Because of the section 87A rebate of up to Rs. 60,000, tax is nil for taxable income up to Rs. 12 lakh. With the Rs. 75,000 standard deduction, a salaried person can have zero tax up to about Rs. 12.75 lakh of gross salary.

Which deductions do I lose if I pick the new regime?

You lose most of them, including 80C, 80D, HRA, LTA and home-loan interest under section 24. The main survivors are the standard deduction of Rs. 75,000 and the employer's NPS contribution under 80CCD(2).

Does the old regime still make sense for anyone?

Yes, usually for people with large deductions such as high home-loan interest, full 80C, HRA and NPS combined. If your total deductions push taxable income well below the new-regime figure, the old regime can still win; this calculator shows the exact difference.

Is the 4% cess included in the tax I pay?

Yes. A 4% Health and Education Cess is added on top of the calculated tax (after any rebate) in both regimes, and high incomes also attract a surcharge. This calculator includes the cess in the final totals.