Income Tax Calculator (New Regime) – FY 2025–26
Enter either your monthly salary or total income for FY 2025–26. Tax is calculated based on latest New Regime slabs and Section 87A. Keywords: income tax calculator 2026, new regime India, government salary tax.
Income Tax Calculator Guide (New Regime): FY 2025–26 (AY 2026–27) with Budget 2025 Changes
The Income Tax Calculator for the New Tax Regime (Section 115BAC) helps salaried government employees and private sector workers quickly estimate annual tax liability, monthly TDS deductions, and net in-hand income for FY 2025–26 (AY 2026–27). This guide explains the new slab rates, standard deductions, and how to use the calculator effectively.
1. What is the New Tax Regime (Section 115BAC)?
The New Tax Regime is a simplified income tax system introduced to reduce tax burden through lower slab rates and wider brackets. From FY 2025–26 onwards, it has become the default regime for most taxpayers, though individuals can still opt for the old regime if beneficial.
Key Features of New Tax Regime:
- Lower Tax Rates: Slab rates reduced progressively (0% up to ₹4 lakh, then 5%, 10%, 15%, etc.).
- Unified Slabs: Same slabs apply to all taxpayers regardless of age (unlike old regime with separate senior citizen slabs).
- Fewer Deductions: Most deductions (80C, 80D, HRA, home loan interest) are NOT allowed in new regime.
- Standard Deduction Available: Salaried individuals get standard deduction of ₹75,000 (new regime) or ₹50,000 (old regime) from salary/pension.
- Section 87A Rebate: Complete tax rebate for taxable income up to specified limits (₹12 lakh for new regime, ₹5 lakh for old regime).
- Simpler Compliance: Fewer deduction proofs and documentation required.
✓ New Regime Advantage: For most salaried individuals earning up to ₹25 lakh annually, the new regime offers 10-15% lower tax compared to the old regime because of lower slab rates and simpler structure.
2. Income Tax Slabs – FY 2025–26 (New Regime)
Budget 2025 increased the basic exemption limit to ₹4 lakh and introduced flexible slabs. Here's the complete breakdown:
| Taxable Income (After Standard Deduction) | Tax Rate | Amount (on income in this slab) |
|---|---|---|
| Up to ₹4,00,000 | Nil | ₹0 |
| ₹4,00,001 – ₹8,00,000 | 5% | Max ₹20,000 (on ₹4L) |
| ₹8,00,001 – ₹12,00,000 | 10% | Max ₹40,000 (on ₹4L) |
| ₹12,00,001 – ₹16,00,000 | 15% | Max ₹60,000 (on ₹4L) |
| ₹16,00,001 – ₹20,00,000 | 20% | Max ₹80,000 (on ₹4L) |
| ₹20,00,001 – ₹24,00,000 | 25% | Max ₹100,000 (on ₹4L) |
| Above ₹24,00,000 | 30% | 30% of excess above ₹24L |
Note: Health & Education Cess (4%) applies on total tax. Surcharge (5-37%) applies for income above ₹50 lakh.
3. Standard Deduction and Rebate (Section 87A) – UPDATED FY 2025–26
Even under the new regime, salaried employees and pensioners get deductions and tax relief to reduce their tax burden. FY 2025–26 introduced significant improvements in both standard deduction and rebate limits.
Standard Deduction: ₹75,000 (New Regime) | ₹50,000 (Old Regime)
- New Regime Amount: ₹75,000 deduction from salary/pension income for FY 2025–26.
- Old Regime Amount: ₹50,000 deduction from salary/pension income for FY 2025–26.
- Who Gets It: All salaried individuals and pensioners under respective regimes (no conditions).
- Automatic Benefit: You don't need to file any documents; it's automatically allowed in the calculator.
- Applicable To: Salary, pension, annuity payments—not business or capital gains.
- Example (New Regime): Annual salary ₹50 lakh → Standard deduction ₹75,000 → Taxable income = ₹49,25,000.
Section 87A Rebate – Enhanced in FY 2025–26
New Tax Regime (Major Improvement!):
- Maximum Rebate: ₹60,000 (increased from ₹25,000)
- Applicable Limit: For taxable income up to ₹12,00,000
- Effective Benefit: Salaried employees with gross salary up to ₹12.75 lakh (after ₹75,000 standard deduction) pay ZERO tax.
- How It Works: If your calculated tax is ₹60,000 or less, Section 87A rebate fully eliminates it (up to ₹60,000 rebate).
Old Tax Regime (Unchanged):
- Maximum Rebate: ₹12,500
- Applicable Limit: For taxable income up to ₹5,00,000
- Purpose: Complete tax relief for lower-income earners.
📊 Practical Example (New Regime):
For someone with ₹12 lakh taxable income:
- ₹0 – ₹4 lakh @ 0% = ₹0
- ₹4 – ₹8 lakh (₹4L) @ 5% = ₹20,000
- ₹8 – ₹12 lakh (₹4L) @ 10% = ₹40,000
- Total tax = ₹60,000
- Section 87A Rebate = ₹60,000
- Net tax = ₹0 (ZERO TAX!)
Note: Standard deduction and 87A rebate are the main tax relief mechanisms in the new regime. Most other deductions are NOT available.
4. New Regime vs Old Regime – Comparison (UPDATED)
| Feature | New Regime (FY 2025–26) | Old Regime (FY 2025–26) |
|---|---|---|
| Slab Rates | Lower (0%, 5%, 10%, 15%, 20%, 25%, 30%) | Higher (10%, 20%, 30%) |
| Standard Deduction | ₹75,000 ✅ | ₹50,000 |
| Section 80C Deductions | NOT allowed | Allowed (up to ₹1.5 lakh) |
| HRA Deduction | NOT allowed | Allowed (50%/40%/25% of salary) |
| Home Loan Interest | NOT allowed | Allowed (up to ₹2 lakh) |
| Section 87A Rebate | ₹60,000 (up to ₹12L) ✅ | ₹12,500 (up to ₹5L) |
| Best For | Most salaried employees (60-70% tax benefit) | High deduction claimers, self-employed |
💡 Recommendation: For salaried government employees: New regime is typically ₹15,000–₹50,000 more beneficial because lower rates and higher standard deduction (₹75,000) outweigh loss of HRA deduction. However, if you pay significant home loan interest or invest heavily in insurance/PPF, compare both regimes before filing ITR.
5. Worked Examples – FY 2025–26 (UPDATED)
Example 1: Monthly ₹50,000 Salary (Government Employee) – CORRECTED
Scenario: Government employee, age 35, monthly salary ₹50,000, DA = 50%, new regime.
Calculation:
- Monthly salary: ₹50,000
- Annual gross salary: ₹50,000 × 12 = ₹6,00,000
- Less standard deduction (new regime): ₹75,000 ✅ UPDATED
- Taxable income: ₹5,25,000 ✅ UPDATED
- Tax calculation:
- ₹0 – ₹4,00,000 @ 0% = ₹0
- ₹4,00,001 – ₹5,25,000 (₹1,25,000) @ 5% = ₹6,250
- Total tax before cess: ₹6,250
- Health & Education Cess (4%): ₹250
- Total tax for FY 2025–26: ₹6,500 ✅ UPDATED (was ₹7,800)
- Monthly TDS (~₹542) ✅ UPDATED, In-hand monthly: ₹49,458
Example 2: Annual ₹18,00,000 Salary (Senior Government Employee)
Scenario: Level 10 employee, annual income ₹18,00,000 (including salary, DA, allowances), new regime.
Calculation:
- Annual income: ₹18,00,000
- Less standard deduction (new regime): ₹75,000 ✅ UPDATED
- Taxable income: ₹17,25,000 ✅ UPDATED
- Slab-wise tax:
- ₹0 – ₹4,00,000 @ 0% = ₹0
- ₹4,00,001 – ₹8,00,000 (₹4,00,000) @ 5% = ₹20,000
- ₹8,00,001 – ₹12,00,000 (₹4,00,000) @ 10% = ₹40,000
- ₹12,00,001 – ₹16,00,000 (₹4,00,000) @ 15% = ₹60,000
- ₹16,00,001 – ₹17,25,000 (₹1,25,000) @ 20% = ₹25,000
- Total tax: ₹1,45,000
- Cess (4%): ₹5,800
- Total tax: ₹1,50,800 ✅ UPDATED (was ₹1,56,000)
- Effective tax rate: 8.4% ✅ UPDATED
- Monthly TDS: ~₹12,567 ✅ UPDATED, In-hand monthly: ~₹1,47,433
Example 3: Section 87A Rebate Benefit (Zero Tax Case) – CORRECTED
Scenario: Monthly salary ₹40,000, age 32, standard deduction ₹75,000 (new regime), Section 87A rebate applicable.
Calculation:
- Annual gross: ₹40,000 × 12 = ₹4,80,000
- Less standard deduction (new regime): ₹75,000 ✅ UPDATED
- Taxable income: ₹4,05,000 ✅ UPDATED
- Tax due:
- ₹0 – ₹4,00,000 @ 0% = ₹0
- ₹4,00,001 – ₹4,05,000 (₹5,000) @ 5% = ₹250
- Tax before cess: ₹250
- Cess (4%): ₹10
- Tax after cess: ₹260
- Section 87A Rebate (full): ₹260 ✅ UPDATED
- FINAL TAX = ₹0 (ZERO TAX!)
- In-hand: Full ₹4,80,000 annually (no tax deduction)
6. Monthly TDS Calculation
TDS (Tax Deducted at Source) is the monthly tax your employer deducts from your salary.
Formula: Monthly TDS = (Annual Tax ÷ 12 months)
- HR calculates your estimated annual tax
- Divides it by 12 for monthly TDS
- TDS is deducted along with GPF, NPS, insurance, etc.
- Year-end: If TDS exceeds actual tax, you get refund
Example: Annual tax ₹60,000 → Monthly TDS ≈ ₹5,000
7. Deductions NOT Allowed in New Regime
| Deduction | Limit (Old Regime) | New Regime |
|---|---|---|
| 80C (PPF, Insurance, LIC) | ₹1.5 lakh | NOT Allowed |
| 80D (Medical Insurance) | ₹25,000–₹1L | NOT Allowed |
| HRA Deduction | 50% of salary (X-class) | NOT Allowed |
| Home Loan Interest | ₹2 lakh | NOT Allowed |
✓ Exception: Standard Deduction (₹75,000 new regime) IS allowed. This is the ONLY major deduction.
8. How to Use the Calculator
- Enter Salary: Monthly or annual (auto-converts). Include basic + DA + all allowances.
- Select Age: Below 60 / 60–80 / Above 80 (unified rates in new regime).
- Standard Deduction: Default ₹75,000 (new regime) or ₹50,000 (old regime) for FY 2025–26, based on your regime selection. You can adjust if needed for special circumstances.
- Regime Selection: Ensure "New Tax Regime" is selected (this is the default from FY 2025–26). You can also switch to old regime to compare calculations.
- Click Calculate: Get comprehensive breakdown:
- Slab-wise tax breakdown showing tax at each bracket
- Total annual tax with cess and surcharge (if applicable)
- Section 87A Rebate benefit (if applicable)
- Effective tax rate (total tax ÷ taxable income × 100)
- Monthly TDS estimate to expect in salary
- In-hand income (annual and monthly) after tax deduction
9. Frequently Asked Questions (UPDATED)
Q: Is new regime default from FY 2025–26?
A: Yes. From FY 2025–26 onwards, the new tax regime is the default for all individual taxpayers. However, you can still opt for old regime if you find it more beneficial (especially if you have significant deductions like HRA or home loan interest).
Q: What is the zero tax income limit for FY 2025–26?
A: For FY 2025-26 under new regime: Up to ₹12.75 lakh gross salary ✅ UPDATED. Here's why:
- Gross salary: ₹12,75,000
- Less standard deduction: ₹75,000
- Taxable income: ₹12,00,000
- Tax due: ₹60,000 (at progressive slabs)
- Section 87A Rebate: ₹60,000
- Net tax: ₹0 (ZERO!)
Q: What's the standard deduction for new regime?
A: ₹75,000 ✅ (New Regime) | ₹50,000 (Old Regime) for FY 2025–26
Q: Section 87A Rebate limit?
A: ₹60,000 maximum ✅ (up to ₹12L taxable income) for new regime. Old regime: ₹12,500 (up to ₹5L).
Q: Can I claim HRA in new regime?
A: No. HRA is NOT allowed in new regime. This is an advantage of old regime for X-class city employees.
Q: What if my income is below ₹4.5 lakh annually?
A: Your tax will be zero or very low. With standard deduction of ₹75,000 (new regime) ✅ UPDATED, any income up to ₹4,75,000 results in taxable income of ₹4,00,000 or less, where tax rate is 0%. Section 87A rebate further reduces any minimal tax liability.
Q: When will I get my income tax refund?
A: After filing your ITR (Income Tax Return) by July 31, the income tax department processes your refund. Typically, refunds are credited within 3–6 months after filing. You can track refund status on the IT department's website.
Q: How do I know if old or new regime is better for me?
A: Compare both: Calculate tax under both regimes. If old regime tax is lower by ₹10,000+, opt for old regime (you can still switch before filing ITR); otherwise, stick with new regime (which is default). Use this calculator to compare instantly.
Q: Is the standard deduction fixed or can it change?
A: The standard deduction (₹75,000 new regime; ₹50,000 old regime) ✅ UPDATED for FY 2025–26 can be revised in future budgets. This calculator uses FY 2025–26 rates. Check official income tax notifications for any changes in future years.
Q: Is surcharge applicable to my income?
A: Surcharge is NOT applicable for most salaried employees earning up to ₹50 lakh annually. For income above ₹50 lakh, surcharge ranges from 5% to 37%. This calculator accounts for it automatically if your income triggers surcharge.
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Disclaimer & Data Sources
This calculator and guide are based on the FY 2025–26 Income Tax Act, Budget 2025 notifications, and official Government of India tax announcements as of January 2026. Income tax laws and slab rates are subject to change with each budget. The calculations are for informational and estimation purposes only. For official tax confirmation, ITR filing, or complex cases, consult a Chartered Accountant or tax professional. This guide does not constitute professional tax advice.