Income Tax Calculator India 2025-26
Compare New vs Old regime — updated with Budget 2025 slabs & ₹12L rebate
Your Income
New Regime
₹0
Taxable: ₹11,25,000 | Cess: ₹0
Old Regime
₹1,11,800
Taxable: ₹9,75,000 | Cess: ₹4,300
💡 New regime saves you
₹1,11,800
Tax vs Take Home (New Regime)
Effective Rate
0.0%
Slab-wise Breakdown (New Regime)
| Slab | Rate | Taxable | Tax |
|---|---|---|---|
| ₹0.0L - ₹4.0L | 0% | ₹4,00,000 | ₹0 |
| ₹4.0L - ₹8.0L | 5% | ₹4,00,000 | ₹20,000 |
| ₹8.0L - ₹12.0L | 10% | ₹3,25,000 | ₹32,500 |
Monthly Salary
₹1,00,000
Monthly Tax
₹0
Monthly In-Hand
₹1,00,000
Daily Earnings
₹3,288
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📖 Learn More About Income Tax Calculator India 2025-26
How Income Tax is Calculated in India (FY 2025-26)
Indian income tax is calculated on a progressive slab system — meaning different portions of your income are taxed at different rates. You don't pay the highest applicable rate on your entire income; only the amount falling in each slab is taxed at that slab's rate. This is a fundamental point many taxpayers misunderstand.
For FY 2025-26 (Assessment Year 2026-27), India has two tax regimes: the New Tax Regime (default, with lower rates but fewer deductions) and the Old Tax Regime (higher rates but allows 80C, 80D, HRA, and other deductions). Budget 2025 made the new regime significantly more attractive by offering zero tax on income up to ₹12 lakh.
The tax is calculated on your taxable income, not gross income. Taxable income = Gross Salary − Standard Deduction − Eligible Deductions (in old regime). Then tax slabs are applied. Finally, 4% Health and Education Cess is added to the calculated tax. If taxable income is within the Section 87A rebate limit, the entire tax is waived.
📊 Income Tax Slabs — FY 2025-26 (AY 2026-27)
🆕 New Tax Regime (Default)
🔖 Old Tax Regime
📝 Worked Example: ₹15 Lakh Salary
New Regime Calculation:
Gross: ₹15,00,000
− Standard Deduction: ₹75,000
= Taxable: ₹14,25,000
Tax: 0% on ₹4L = ₹0
Tax: 5% on ₹4L = ₹20,000
Tax: 10% on ₹4L = ₹40,000
Tax: 15% on ₹2.25L = ₹33,750
Base Tax = ₹93,750
+ 4% Cess = ₹3,750
Total Tax = ₹97,500
Old Regime Calculation (no deductions):
Gross: ₹15,00,000
− Standard Deduction: ₹50,000
= Taxable: ₹14,50,000
Tax: 0% on ₹2.5L = ₹0
Tax: 5% on ₹2.5L = ₹12,500
Tax: 20% on ₹5L = ₹1,00,000
Tax: 30% on ₹4.5L = ₹1,35,000
Base Tax = ₹2,47,500
+ 4% Cess = ₹9,900
Total Tax = ₹2,57,400
💡 New Regime saves ₹1,59,900 for this example (without any deductions)
💡 Tax Saving Tips for FY 2025-26
📊 Choose the Right Regime First
Calculate your tax under both regimes before choosing. New regime is better for most people under ₹15 lakh with standard deductions. Old regime can save money if you have: 80C investments + high HRA + home loan interest deduction exceeding ₹3.5-4 lakhs total. This calculator shows you exactly which saves more.
💰 Maximize 80C in Old Regime
Section 80C allows ₹1.5 lakh deduction. Best options: ELSS mutual funds (3-year lock-in, market returns), PPF (7.1% tax-free, 15-year lock-in), EPF (your employer contributes too — check your salary slip). Avoid traditional LIC policies as investment — term insurance + ELSS is almost always better.
🏥 Section 80D: Health Insurance Deduction
Premium paid for health insurance is deductible: Self/spouse/children: Up to ₹25,000. Parents (below 60): Up to ₹25,000 additional. Senior citizen parents (60+): Up to ₹50,000. Preventive health checkups: Up to ₹5,000 within the above limits. Total maximum: ₹75,000 (if parents are senior citizens). Valid only in Old Regime.
🏠 Home Loan Deductions (Old Regime)
Section 24(b): Up to ₹2 lakh deduction on home loan interest for self-occupied property. Section 80C: Principal repayment is part of the ₹1.5L limit. First-time homebuyers may also claim Section 80EEA: additional ₹1.5L on interest (if loan sanctioned before March 2022). Combined, home loan can give ₹3.5L+ in annual deductions.
📅 File ITR on Time
Filing your Income Tax Return (ITR) by July 31st is crucial: Belated filing penalty is ₹5,000 (reduced to ₹1,000 if income below ₹5L). Delayed refunds — if you're due a refund, filing early gets you money faster. Interest u/s 234A: 1% per month on unpaid taxes after due date. Use AIS (Annual Information Statement) at incometax.gov.in to pre-verify your income data.
🎯 NPS for Additional Tax Savings
National Pension System (NPS) provides an extra ₹50,000 deduction under Section 80CCD(1B) beyond the ₹1.5L limit of 80C. This is available in the Old Regime only. Additionally, employer NPS contribution up to 10% of salary is deductible under 80CCD(2) — and this is available even in the New Regime! If your employer offers NPS, maximize employer contribution for this benefit.
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Frequently Asked Questions
What changed in Budget 2025 for income tax?
Budget 2025 (presented Feb 2025, effective FY 2025-26) made the new tax regime significantly more attractive: (1) No income tax up to ₹12 lakh taxable income via enhanced Section 87A rebate, (2) New slab structure with lower rates, (3) Standard deduction increased to ₹75,000 (from ₹50,000), (4) Effectively zero tax for income up to ₹12.75 lakh (₹12L + ₹75K standard deduction). This is the biggest middle-class tax relief in India in over a decade.
Which tax regime is better — old or new in 2025-26?
New regime is generally better if your total deductions (80C + 80D + HRA + home loan interest etc.) are less than ₹3.5-4 lakhs. Old regime remains beneficial for salaried individuals with: 80C investments of ₹1.5L + 80D premium ₹50K+ + HRA exemption ₹1L+ + home loan interest ₹2L. For most employees earning under ₹15 lakh, the new regime is now more beneficial. Use this calculator's comparison feature to see your exact savings.
What is Section 87A rebate and who qualifies?
Section 87A provides a rebate (tax credit) on your calculated income tax. In the new regime (FY 2025-26): If your taxable income (after standard deduction) is ₹12 lakh or less, your entire tax liability is waived. This means ₹0 tax for income up to ₹12.75 lakh (₹12L taxable + ₹75K standard deduction = ₹12.75L gross income). In the old regime: 87A rebate applies if taxable income ≤ ₹5 lakh, making tax ₹0 for income up to ₹5.5 lakh.
What is the standard deduction for salaried employees?
Standard deduction is a flat deduction available to all salaried employees and pensioners without needing to submit any bills or proof: New Regime FY 2025-26: ₹75,000. Old Regime: ₹50,000. This is automatically deducted from your gross salary before calculating taxable income. It was introduced to account for employment-related expenses like commuting, professional clothing, and work tools.
Is health and education cess included in this calculator?
Yes! This calculator adds 4% Health and Education Cess on the calculated tax amount, exactly as done by the Income Tax Department. Cess is applied on the base tax (after 87A rebate) and goes toward funding health and education infrastructure. Note: Cess is not applicable if your tax liability after 87A rebate is ₹0.
What deductions are allowed under Section 80C?
Section 80C allows deductions up to ₹1,50,000 per year (available only in Old Regime) for: PPF contributions, EPF contributions, Life insurance premiums, ELSS mutual fund investments, NSC (National Savings Certificate), 5-year bank FD, Principal repayment of home loan, Sukanya Samriddhi Yojana, Tuition fees for children's education. Most salaried employees already have 80C filled via EPF + LIC + ELSS.
Can I switch between old and new tax regime every year?
Yes, for salaried employees! If you have no business income, you can switch between old and new regime every financial year. The declaration must be made to your employer at the start of the financial year (or during joining). If you miss declaring, employers typically default to the new regime. Business owners and self-employed individuals can switch only once in a lifetime (from old to new regime).
What is surcharge on income tax and when does it apply?
Surcharge is an additional tax on high incomes: Income 50L-1Cr: 10% surcharge on tax. Income 1Cr-2Cr: 15% surcharge. Income 2Cr-5Cr: 25% surcharge. Income above 5Cr: 37% surcharge (in old regime), 25% (in new regime — capped under Budget 2023). This calculator focuses on income up to ₹50 lakh where surcharge doesn't apply. For higher incomes, consult a CA.
What is the new tax regime's benefit for income of ₹15 lakh?
For ₹15 lakh gross salary in New Regime FY 2025-26: Taxable income = ₹15L – ₹75K (std deduction) = ₹14.25L. Tax calculation: 0% on ₹0-4L = ₹0, 5% on ₹4-8L = ₹20,000, 10% on ₹8-12L = ₹40,000, 15% on ₹12-14.25L = ₹33,750. Total tax = ₹93,750. Cess = ₹3,750. Total = ₹97,500. Effective rate = 6.5%. In Old Regime (without deductions): Tax would be ₹2,17,500. New regime saves ₹1,20,000!
What documents are needed for income tax filing (ITR)?
For salaried individuals: Form 16 (from employer), AIS/TIS (Annual Information Statement from Income Tax portal), Form 26AS (tax credit statement), Bank statements, Investment proofs (if claiming deductions in old regime), Home loan certificate (if applicable). ITR-1 (Sahaj) is the simplest form for salaried individuals with income up to ₹50L. File before July 31st to avoid late fees of ₹5,000. The Income Tax portal (incometax.gov.in) allows free online filing.