EaseValueEvery taxpayer in India now faces the same question each year: Old regime with deductions, or New regime with lower slabs? Most calculators just print two numbers and leave you to guess. This one gives you a verdict — which regime wins, by how much, and the single figure that decides it: your break-even deductions. Below that figure the New regime wins no matter what you invest; above it, the Old regime pays for itself. Enter your income and deductions once and you will know exactly where you stand for FY 2025-26 (AY 2026-27), and whether another ₹1.5 lakh locked into 80C would change anything at all.
How it’s calculated
- New regime slabs for FY 2025-26: up to ₹4,00,000 nil, ₹4–8L 5%, ₹8–12L 10%, ₹12–16L 15%, ₹16–20L 20%, ₹20–24L 25%, and 30% above ₹24,00,000.
- Old regime slabs for FY 2025-26: up to ₹2,50,000 nil, ₹2.5–5L 5%, ₹5–10L 20%, and 30% above ₹10,00,000. These have not changed in years.
- Standard deduction on salary and pension (Section 19 of the Income-tax Act, 2025) is ₹75,000 under the New regime and ₹50,000 under the Old. Business and other income gets neither.
- The rebate under Section 156 (Section 87A of the 1961 Act) makes tax nil under the New regime for total income up to ₹12,00,000 — which is ₹12,75,000 of salary once the standard deduction is applied. Under the Old regime the equivalent rebate only reaches ₹5,00,000.
- Marginal relief applies just above the ₹12,00,000 line: your tax can never exceed the amount by which your income crosses ₹12,00,000. So at ₹12,25,000 total income the tax is ₹25,000 plus cess, not the ₹63,750 the slabs alone would produce. Earning a rupee more never leaves you worse off.
- Deductions count only under the Old regime — 80C up to ₹1,50,000, 80D health insurance, home-loan interest on a self-occupied house up to ₹2,00,000 (house property, Sections 20–24), HRA exemption, and NPS under 80CCD(1B) up to ₹50,000. The New regime allows almost none of these.
- Health and Education Cess of 4% is added to the tax under both regimes.
- The break-even figure is found by solving for the deduction amount at which Old-regime tax equals New-regime tax at your income. Compare it against the deductions you actually have — that comparison, not the raw tax numbers, is the decision.
- Surcharge on income above ₹50 lakh is not applied here, so results for very high incomes are indicative.
Frequently asked questions
Which regime is better for me — old or new?
It depends entirely on how much you can deduct. The New regime has wider slabs and a much bigger rebate, so it wins for most people with modest deductions. The Old regime only overtakes it once your total deductions — 80C, 80D, home-loan interest, HRA and NPS combined — cross a break-even figure that rises with your income. At ₹15 lakh of salary that figure is roughly ₹5.4 lakh of deductions; below that the New regime is cheaper. This calculator computes the exact number for your income.
Is income up to ₹12 lakh really tax-free under the new regime?
Yes, for FY 2025-26. The rebate under Section 156 (formerly 87A) wipes out the tax entirely where total income does not exceed ₹12,00,000. For a salaried person the ₹75,000 standard deduction lifts that to ₹12,75,000 of gross salary. Note it is a rebate on tax, not an exemption of income — the moment total income crosses ₹12,00,000 the rebate is gone and slab tax applies, cushioned only by marginal relief.
What is marginal relief and when does it help me?
Without it, someone at ₹12,10,000 would pay far more tax than the ₹10,000 of extra income they earned above the rebate line — an absurd result. Marginal relief caps the tax at the amount of income above ₹12,00,000. So at ₹12,10,000 the tax is ₹10,000 plus cess. The relief tapers off naturally at around ₹12.75 lakh, where normal slab tax becomes the lower of the two.
Should I keep investing in 80C if I am on the new regime?
For tax reasons, no — the New regime does not allow 80C, so a fresh ELSS or PPF contribution buys you nothing at all in tax. If the calculator shows your break-even is far above your current deductions, no realistic amount of 80C investment will flip the answer. Keep investing, but judge those products on their returns, lock-in and your goals rather than on a deduction you cannot claim. PPF and EPF still earn tax-free interest regardless of regime.
Can I switch between the old and new regime every year?
A salaried person with no business income can choose afresh each year while filing the return, so you can move back and forth as your deductions change. Someone with business or professional income can opt out of the New regime only once, and once they return to the New regime they cannot go back to the Old again. The New regime is the default — if you want the Old one you must actively opt for it, and for business income that means filing Form 10-IEA before the due date.
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