Income Tax Calculator

What Does an Income Tax Calculator Do?

An income tax calculator takes your income, deductions, and exemptions, and tells you how much tax you owe under both the old and new tax regimes, so you can pick whichever results in a lower tax bill.

Since the new tax regime became the default option, most salaried taxpayers in India now need to actively compare both regimes every year, because the better choice depends on how many deductions you actually claim.

Income Tax Slabs for FY 2026-27

New Tax Regime (default)

Standard deduction is ₹75,000. The Section 87A rebate is up to ₹60,000, which brings tax liability to nil for taxable income up to ₹12 lakh, or about ₹12.75 lakh of gross salary once the standard deduction is applied.

Old Tax Regime (optional)

Standard deduction is ₹50,000 and the Section 87A rebate is up to ₹12,500, bringing tax to nil for taxable income up to ₹5 lakh. Senior citizens aged 60 to 79 get a ₹3 lakh basic exemption and those 80 and above get ₹5 lakh.

Which Regime Should You Choose?

The old regime only wins if your total deductions and exemptions, covering 80C, 80D, HRA, home loan interest and so on, are large enough to bring your taxable income down enough to offset its higher rates and lower exemption limit.

As a rough guide, salaried individuals claiming less than roughly ₹4 to 4.5 lakh in total deductions are usually better off in the new regime, given its wider slabs and higher basic exemption. Above that, it is worth calculating both, since the crossover point shifts depending on your exact income level.

Worked Example

A salaried individual with ₹15 lakh gross income and ₹3 lakh in eligible deductions under 80C, 80D and HRA:

In this case the new regime results in lower tax despite the deductions claimed under the old regime, because the new regime’s slabs are wider. This crossover shifts at different income and deduction levels, which is exactly why a calculator that runs both scenarios side by side is more useful than a rule of thumb.

Marginal Relief, and Why It Matters

Two cliffs in the tax schedule are smoothed by marginal relief, and a calculator that skips them will overstate your tax:

• The rebate cliff. Just above ₹12 lakh of taxable income in the new regime, tax is capped at the amount by which your income exceeds ₹12 lakh. Without this, earning one rupee more would cost you tens of thousands.
• The surcharge cliffs. Surcharge kicks in at ₹50 lakh, ₹1 crore and ₹2 crore of taxable income. At each step, relief caps the combined tax and surcharge so that crossing the threshold never leaves you worse off.

Key Takeaways

• The new tax regime is the default; you must actively opt for the old regime if it works out cheaper for you.
• New regime: nil up to ₹4 lakh, rising in steps to 30% above ₹24 lakh, with a ₹75,000 standard deduction and effective nil tax up to about ₹12.75 lakh of gross salary.
• Old regime: nil up to ₹2.5 lakh and 30% above ₹10 lakh, but it allows deductions like 80C, 80D and HRA that the new regime does not.
• The right regime depends entirely on how much you can actually claim in deductions, not on income level alone.