Old vs New Tax Regime Calculator

What is the Old vs New Tax Regime?

India offers two income tax systems for individual taxpayers: the old tax regime and the new tax regime. The old regime has been in place for decades and allows taxpayers to claim various deductions and exemptions such as Section 80C, 80D, HRA, and home loan interest to reduce their taxable income. The new tax regime was introduced in the Union Budget 2020 and offers lower tax slab rates but eliminates most deductions.

Under the new Income Tax Act 2025, which took effect from 1 April 2026, the new tax regime has become the default regime for all taxpayers. If you do not actively choose the old regime, the new regime slabs will apply automatically. This shift makes it essential for every salaried employee to compare both regimes before filing their return. You can refer to the Income Tax Department's official calculator for verification.

• The old regime allows deductions under Sections 80C, 80D, 80E, 80G, HRA exemption, LTA, and Section 24b (home loan interest)
• The new regime offers lower tax rates across seven slabs but removes most deductions except standard deduction of Rs 75,000
• Salaried employees can switch between regimes every financial year when filing their income tax return

Income Tax Slabs: Old Regime vs New Regime (FY 2025-26)

The slab structure differs significantly between the two regimes. The new regime has more slabs with lower rates, while the old regime has fewer slabs but allows deductions. Here is the complete comparison:

New Tax Regime Slabs (Default from FY 2025-26):

Old Tax Regime Slabs (FY 2025-26):

Old vs New Tax Regime Comparison with Example

Let's compare both regimes for a salaried employee earning Rs 12 LPA with the following deductions under the old regime:

Old Regime Calculation:

New Regime Calculation:

In this example, the new regime is clearly better. The employee pays zero tax under the new regime compared to Rs 71,864 under the old regime. Even with significant deductions, the Section 87A rebate under the new regime eliminates the tax liability entirely for income up to Rs 12 lakh.

Key Deductions Available Under the Old Tax Regime

The old tax regime allows a wide range of deductions and exemptions that can substantially reduce your taxable income. Here are the major ones:

• Section 80C (Rs 1.5 lakh): Covers investments in EPF, PPF, ELSS mutual funds, 5-year fixed deposits, NSC, life insurance premiums, tuition fees for children, and home loan principal repayment
• Section 80D (Rs 25K/50K/1L): Premium paid for health insurance. Rs 25,000 for self and family (Rs 50,000 if senior citizen). Additional Rs 25,000/50,000 for parents
• HRA Exemption: If you receive HRA and pay rent, the exemption is the minimum of: actual HRA received, 50% of basic (metro) or 40% (non-metro), or rent paid minus 10% of basic salary
• Section 24b (Rs 2 lakh): Interest paid on home loan for a self-occupied property, up to Rs 2,00,000 per year
• Section 80CCD(1B) (Rs 50,000): Additional deduction for contribution to National Pension System (NPS), over and above the 80C limit
• Section 80E: Interest paid on education loan, with no upper limit. Available for up to 8 years from the start of repayment
• Section 80G: Donations to approved charitable institutions, with varying deduction limits (50% or 100% of the donated amount)
• LTA (Leave Travel Allowance): Exemption for travel expenses within India, claimable twice in a block of 4 years. Check our leave encashment calculator for leave-related payouts

When Should You Choose the Old Tax Regime?

The old tax regime is generally the better choice when your total deductions and exemptions are high enough to offset the advantage of lower slab rates under the new regime. Here are the scenarios where the old regime typically wins:

• High HRA exemption: If you live in a metro city and pay rent above Rs 15,000 to Rs 20,000 per month, the HRA exemption alone can save a significant amount
• Home loan interest: If you are paying EMI on a home loan and can claim up to Rs 2 lakh under Section 24b, the old regime becomes attractive
• Full 80C utilization: When you max out the Rs 1.5 lakh limit through EPF, PPF, ELSS, or LIC premiums
• Health insurance: If you pay premiums for yourself and parents, you can claim up to Rs 1 lakh under Section 80D
• Total deductions above Rs 3.75 lakh: As a general rule of thumb, if your combined deductions and exemptions exceed Rs 3.75 lakh to Rs 4 lakh, the old regime usually saves more tax for income levels above Rs 15 lakh

How to Use This Tax Regime Calculator

This free calculator helps you compare your income tax liability under both the old and new tax regime. Follow these steps to get your personalized comparison:

• Step 1: Enter your annual gross salary (your total salary before any deductions, as shown on your offer letter or CTC breakup)
• Step 2: Enter basic salary as a percentage of gross. Check your salary slip; it is typically 40% to 50% of gross salary
• Step 3: Enter HRA received and rent paid (both annual amounts). Select whether you live in a metro or non-metro city
• Step 4: Click "Show Deductions" to enter your Section 80C, 80D, home loan interest, NPS, and other deductions
• Step 5: Click "Compare Tax Regimes" to see a side-by-side comparison with a clear recommendation on which regime saves you more tax