Confused about whether to choose the old tax regime or the new tax regime? You are not alone. Every financial year, millions of salaried employees and taxpayers in India struggle with this decision. That is why we built the SalaryBox Old vs New Tax Regime Calculator — a free online tool that compares your income tax liability under both regimes side by side and tells you which one saves you more money.

With the new Income Tax Act 2025 now in effect from 1 April 2026 and the new tax regime being the default option for all taxpayers, making the right choice has never been more important. In this comprehensive guide, we will walk you through everything you need to know about both tax regimes, the latest tax slabs for FY 2026-27, key deductions, and how to use our free calculator to make the smartest tax decision.

What Is the Old vs New Tax Regime Calculator?

The old vs new tax regime calculator is a free online tool that calculates your income tax under both the old and new tax regimes simultaneously. It shows the results side by side so you can instantly see which regime results in lower tax and higher take-home salary.

Instead of manually calculating tax slabs, deductions, and rebates for each regime separately, this calculator does it all in seconds. Just enter your gross annual income and your deductions, and the tool tells you exactly how much tax you owe under each regime — and which one is better for you.

You can access this tool for free along with our other financial tools on the SalaryBox free tools page.

Old Tax Regime vs New Tax Regime – What Is the Difference?

India currently offers two parallel income tax systems for individual taxpayers. Understanding the fundamental differences between them is essential before you make your choice.

The Old Tax Regime

The old tax regime follows the traditional tax structure with higher tax rates but allows you to claim over 70 deductions and exemptions. These include popular savings like Section 80C (up to Rs 1.5 lakh for PPF, ELSS, LIC, etc.), Section 80D (health insurance premiums), HRA exemption, home loan interest deduction under Section 24(b), and Leave Travel Allowance (LTA).

The standard deduction under the old regime is Rs 50,000 for salaried employees.

If you are a high-income earner with significant investments and a home loan, the old regime can potentially reduce your taxable income by Rs 3-5 lakh or more, making it the cheaper option despite higher slab rates.

The New Tax Regime

The new tax regime, introduced in Budget 2020 and significantly improved in subsequent budgets, offers lower tax slab rates but removes almost all deductions and exemptions. From FY 2024-25 onwards, it became the default tax regime for all taxpayers under Section 115BAC of the Income Tax Act.

The new regime offers a standard deduction of Rs 75,000 (increased from Rs 50,000) and provides a tax rebate under Section 87A that makes income up to Rs 12 lakh effectively tax-free.

For most people who do not have heavy deductions, the new regime results in significantly lower tax. The tax slabs for FY 2026-27 remain unchanged from FY 2025-26 as confirmed in the Union Budget 2026.

Income Tax Slabs – Old Regime vs New Regime (FY 2026-27)

Here are the current income tax slab rates applicable for the financial year 2026-27 (Assessment Year 2027-28) under both regimes. These slabs remain unchanged from FY 2025-26.

New Tax Regime Slabs (FY 2026-27) – Default

Up to Rs 4,00,000 – Nil
Rs 4,00,001 to Rs 8,00,000 – 5%
Rs 8,00,001 to Rs 12,00,000 – 10%
Rs 12,00,001 to Rs 16,00,000 – 15%
Rs 16,00,001 to Rs 20,00,000 – 20%
Rs 20,00,001 to Rs 24,00,000 – 25%
Above Rs 24,00,000 – 30%

Standard deduction: Rs 75,000. Section 87A rebate: Up to Rs 60,000 (making income up to Rs 12 lakh tax-free). Surcharge capped at 25%.

Old Tax Regime Slabs (FY 2026-27) – Individuals Below 60 Years

Up to Rs 2,50,000 – Nil
Rs 2,50,001 to Rs 5,00,000 – 5%
Rs 5,00,001 to Rs 10,00,000 – 20%
Above Rs 10,00,000 – 30%

Standard deduction: Rs 50,000. Section 87A rebate: Up to Rs 12,500 (making income up to Rs 5 lakh tax-free). Surcharge up to 37%.

To understand how these tax components fit into your overall compensation, read our detailed guide on salary structure in India and its tax implications.

How to Use the SalaryBox Old vs New Tax Regime Calculator

Our free calculator is designed to be simple enough for anyone to use, even if you have no background in tax planning. Here is a step-by-step guide.

Step 1 – Enter Your Gross Annual Income

Input your total annual salary including basic pay, HRA, special allowances, and any other income. If you are unsure about your salary breakdown, use our salary calculator to compute it from your CTC.

Step 2 – Enter Your Deductions (For Old Regime)

Add the deductions you are eligible to claim under the old regime. These include Section 80C investments (PPF, ELSS, LIC premiums), Section 80D health insurance premiums, home loan interest, HRA exemption, and any other applicable deductions. The calculator uses these only for the old regime column since the new regime does not allow most of these.

Step 3 – View the Side-by-Side Comparison

The calculator instantly shows your total tax liability under both regimes side by side. It clearly highlights which regime saves you more money and by exactly how much.

Which Tax Regime Is Better – Old or New?

The answer depends entirely on how much you can claim in deductions under the old regime. Here is a practical framework to help you decide.

The Break-Even Rule

If your total deductions under the old regime exceed approximately Rs 3,75,000 (this includes 80C, 80D, HRA, home loan interest, etc.), the old regime is likely cheaper. Below this threshold, the new regime almost always wins because of its lower slab rates and higher rebate.

When the New Regime Is Better

The new regime works best for salaried employees who do not have a home loan, do not invest heavily in tax-saving instruments beyond what they would anyway, live in their own house or get low HRA benefit, or earn up to Rs 12 lakh (where tax is effectively zero under the new regime).

For example, an employee earning Rs 15 lakh per year with only Rs 1.5 lakh in 80C investments and Rs 25,000 in health insurance saves roughly Rs 90,000 more under the new regime compared to the old regime.

When the Old Regime Is Better

The old regime works best for employees who have a home loan with interest exceeding Rs 2 lakh per year, max out Section 80C with Rs 1.5 lakh in investments, claim significant HRA exemption because they pay high rent in metro cities, and have health insurance premiums for self and parents under Section 80D.

If your combined deductions cross Rs 3.75-4 lakh, always run the numbers through our calculator — the old regime may save you significantly more.

To learn more about how TDS is calculated on your salary under both regimes, check out our comprehensive guide to TDS on salaries.

Key Deductions Available Under the Old Tax Regime

Understanding which deductions you can claim is critical for deciding your regime. Here are the most important ones.

Section 80C – Up to Rs 1,50,000

This is the most popular tax-saving section. Eligible investments include PPF contributions, ELSS mutual funds, 5-year fixed deposits, life insurance premiums, employee provident fund (EPF) contributions, children’s tuition fees, and home loan principal repayment.

If you contribute to EPF through your employer, that amount already counts towards your 80C limit. Learn more about how EPF works and its benefits.

Section 80D – Health Insurance Premiums

You can claim up to Rs 25,000 for health insurance premiums for yourself and your family, plus an additional Rs 25,000 (or Rs 50,000 for senior citizen parents) for parents’ health insurance. The total deduction can go up to Rs 75,000 if your parents are senior citizens.

HRA Exemption

If you receive House Rent Allowance as part of your salary and pay rent, you can claim HRA exemption under the old regime. This can be a substantial deduction, especially for employees in metro cities paying high rent. Use our HRA calculator to determine your exact HRA exemption amount.

Home Loan Interest – Section 24(b)

You can claim up to Rs 2,00,000 per year on interest paid on a home loan for a self-occupied property. This is one of the biggest deductions that tilts the balance towards the old regime for many taxpayers.

Other Deductions

Additional deductions include NPS contributions under Section 80CCD(1B) up to Rs 50,000, education loan interest under Section 80E, donations under Section 80G, and Leave Travel Allowance (LTA). Calculate your LTA benefit using our LTA calculator.

What Deductions Are Allowed Under the New Tax Regime?

The new tax regime severely restricts deductions. Only the following are permitted.

Standard deduction of Rs 75,000 for salaried employees and pensioners. Employer’s contribution to NPS under Section 80CCD(2). Deduction for family pension under Section 57(iia). Voluntary retirement compensation exemption under Section 10(10C). Gratuity and leave encashment exemptions at the time of retirement or resignation.

All other popular deductions — 80C, 80D, HRA, home loan interest, LTA — are not available under the new regime. This is the trade-off for lower slab rates.

When an employee exits the company, certain components like gratuity and leave encashment are calculated during the full and final settlement. Use our FnF calculator and leave encashment calculator to estimate these amounts.

New Income Tax Act 2025 – What Changed from 1 April 2026?

The Income Tax Act 2025, which replaces the 64-year-old Income Tax Act 1961, came into effect from 1 April 2026. Here is what you need to know.

Simplified Language and Structure

The new act is a complete rewrite with simpler language, fewer sections, and clearer terminology. For example, “Assessment Year” is now called “Tax Year.” The intent is to make tax compliance easier for ordinary taxpayers.

Tax Slabs Remain Unchanged

Despite the new act, the income tax slab rates for FY 2026-27 remain the same as FY 2025-26. The government did not announce any changes to tax rates in the Union Budget 2026. Both old and new regime slabs continue at the same rates.

New Regime Remains the Default

The new tax regime continues to be the default option. If you do not actively opt for the old regime by informing your employer or filing a declaration, your TDS will be calculated under the new regime automatically.

Employers need to ensure their payroll systems are updated to handle both regimes correctly. If you manage payroll for your team, our complete guide to payroll processing in India covers everything including TDS computation.

Old vs New Tax Regime – Comparison with Examples

Let us look at practical examples to see how the two regimes compare at different income levels.

Example 1 – Annual Income of Rs 10 Lakh (Minimal Deductions)

An employee earning Rs 10 lakh per year with only Rs 1.5 lakh in 80C deductions and no home loan.

Under the old regime: Taxable income after standard deduction (Rs 50,000) and 80C (Rs 1,50,000) = Rs 8,00,000. Tax payable = approximately Rs 62,500 plus cess.

Under the new regime: Taxable income after standard deduction (Rs 75,000) = Rs 9,25,000. Tax payable = approximately Rs 41,600 plus cess (after applying lower slab rates).

Winner: New regime saves approximately Rs 20,000.

Example 2 – Annual Income of Rs 20 Lakh (Heavy Deductions)

An employee earning Rs 20 lakh per year with Rs 1.5 lakh in 80C, Rs 2 lakh home loan interest, Rs 50,000 in 80D, and Rs 1.5 lakh HRA exemption. Total deductions = Rs 5.5 lakh.

Under the old regime: Taxable income = Rs 14,00,000. Tax payable = approximately Rs 2,10,000 plus cess.

Under the new regime: Taxable income = Rs 19,25,000. Tax payable = approximately Rs 2,73,000 plus cess.

Winner: Old regime saves approximately Rs 63,000.

These examples show why a blanket recommendation does not work — your specific deductions determine the winner. Use our calculator to get your exact numbers.

Can You Switch Between Old and New Tax Regime Every Year?

Yes, salaried employees can switch between the old and new tax regime every financial year. You are not locked into one regime permanently.

At the beginning of each financial year, your employer asks you to declare your preferred tax regime. You can inform your employer and switch before the first salary processing. Even if you miss this window, you can choose the regime at the time of filing your Income Tax Return (ITR).

However, if you have business or professional income, the rules are different — you can only switch back to the old regime once after opting for the new regime.

For salaried individuals, the flexibility to switch every year means you should run the comparison through our calculator at the start of each financial year as your deductions and income may change.

To understand how your salary components and deductions interact with tax, read our guide on allowances in salary: types and examples.

Tax Saving Tips for FY 2026-27

Regardless of which regime you choose, here are practical tips to minimise your tax liability.

If You Choose the Old Regime

Max out your Section 80C limit with PPF, ELSS, or EPF contributions. Invest in health insurance for yourself and your parents to claim 80D benefits. If you have a home loan, ensure you claim both principal (80C) and interest (Section 24b) deductions. Keep rent receipts organised if you claim HRA exemption. Consider NPS contributions for an additional Rs 50,000 deduction under 80CCD(1B).

Use our tax saving calculator to estimate how much you can save with various deductions under the old regime.

If You Choose the New Regime

Since deductions are limited, focus on increasing your in-hand salary by optimising your CTC structure. Negotiate for higher employer NPS contribution (which is allowed under the new regime). Use the saved amount (that you would have invested in tax-saving instruments) for better-return investments. Take advantage of the Rs 75,000 standard deduction automatically applied.

How TDS Is Calculated Under Both Regimes

Your employer deducts Tax Deducted at Source (TDS) from your monthly salary based on the regime you choose. Here is how it works.

If you do not submit any declaration, your employer calculates TDS under the new regime by default. If you submit Form 12BAA opting for the old regime along with your investment proofs, your employer calculates TDS under the old regime with all declared deductions.

It is important to submit your investment declarations early in the financial year so your employer can spread the TDS evenly across all months. Otherwise, excess TDS in early months reduces your monthly take-home pay unnecessarily.

For a step-by-step understanding of how TDS works, read our beginner’s guide to TDS. You can also use our TDS calculator to estimate your monthly and annual TDS deduction.

Who Should Use the Old vs New Tax Regime Calculator?

This free tool is built for anyone who pays income tax in India.

Salaried Employees

Compare both regimes before submitting your tax declaration to your employer at the start of FY 2026-27. This ensures your TDS is optimised from month one.

HR Managers and Payroll Teams

Help employees make informed tax regime choices during onboarding or at the start of each financial year. Pair it with your payroll management system for seamless TDS processing.

Small Business Owners and Freelancers

If you draw a salary from your own company, this calculator helps you structure your compensation in the most tax-efficient way.

Tax Planning Consultants

Quickly show clients a visual side-by-side comparison of both regimes with exact numbers, making tax advisory conversations faster and clearer.

Benefits of Using the SalaryBox Old vs New Tax Regime Calculator

Here is why thousands of taxpayers trust our tool every financial year.

It is completely free with no registration required. It provides instant side-by-side comparison of both regimes. It is updated for FY 2026-27 with the latest tax slabs, rebates, and surcharge rules. It factors in standard deduction, Section 87A rebate, and health and education cess automatically. It clearly tells you which regime is better and by how much. And it is built by SalaryBox — a trusted name in payroll management for Indian businesses.

Other Free Tax and Salary Tools from SalaryBox

Along with the old vs new tax regime calculator, SalaryBox offers a complete suite of free financial tools to help employees and businesses manage payroll and compliance.

Salary Calculator – Calculate your in-hand salary from CTC.
TDS Calculator – Estimate your monthly and annual TDS deduction.
HRA Calculator – Find out your exact HRA exemption amount.
PF Calculator – Calculate your provident fund contributions and returns.
PPF Calculator – Estimate your PPF maturity amount.
Gratuity Calculator – Check your gratuity eligibility and amount.
Professional Tax Calculator – Calculate state-wise professional tax.
ESI Calculator – Compute your ESI contributions.
Tax Saving Calculator – Plan your deductions for maximum tax savings.
FnF Calculator – Calculate full and final settlement amounts.

Explore all tools on our free tools page.

Frequently Asked Questions (FAQ)

What is an old vs new tax regime calculator?

An old vs new tax regime calculator is a free online tool that computes your income tax liability under both the old and new tax regimes side by side. It helps you instantly see which regime results in lower tax based on your income and deductions. The SalaryBox calculator is updated for FY 2026-27 and factors in the latest slabs, rebates, and cess.

Which tax regime is better for a salary of Rs 10 lakh?

For a salary of Rs 10 lakh, the new tax regime is usually better unless you have total deductions exceeding Rs 3.75 lakh under the old regime. Under the new regime, income up to Rs 12 lakh is effectively tax-free due to the Section 87A rebate, making it the clear winner for most people at this income level.

Which tax regime is better for a salary of Rs 15 lakh?

At Rs 15 lakh, the new regime saves approximately Rs 1-1.5 lakh more than the old regime for most people. The old regime can win only if your total deductions (80C + 80D + HRA + home loan interest) exceed approximately Rs 4 lakh. Use our calculator to check with your exact numbers.

Can I switch between old and new tax regime every year?

Yes, salaried employees can switch between the old and new tax regime every financial year. You can inform your employer at the start of the year or choose your regime when filing your Income Tax Return. There is no lock-in for salaried individuals.

What is the standard deduction under the new tax regime for FY 2026-27?

The standard deduction under the new tax regime for FY 2026-27 is Rs 75,000 for salaried employees and pensioners. Under the old tax regime, the standard deduction is Rs 50,000.

Is income up to Rs 12 lakh tax-free under the new regime?

Yes, under the new tax regime, income up to Rs 12 lakh (taxable income after standard deduction) is effectively tax-free. This is because the Section 87A rebate of up to Rs 60,000 fully offsets the tax on taxable income up to Rs 12 lakh. For salaried employees, with the Rs 75,000 standard deduction, gross income up to Rs 12.75 lakh is effectively tax-free.

What deductions are not allowed under the new tax regime?

The new tax regime does not allow deductions under Section 80C (PPF, ELSS, LIC), Section 80D (health insurance), HRA exemption, home loan interest under Section 24(b), LTA, and most other exemptions available under the old regime. Only the standard deduction and employer NPS contribution are allowed.

Is the SalaryBox old vs new tax regime calculator free?

Yes, the SalaryBox old vs new tax regime calculator is completely free. No registration, login, or payment is required. You can use it unlimited times.

Conclusion

Choosing between the old and new tax regime is one of the most impactful financial decisions you make every year. The wrong choice can cost you tens of thousands of rupees in avoidable taxes. With the new Income Tax Act 2025 now in force and the new regime as the default, it is essential to run the numbers before making your decision.

The SalaryBox Old vs New Tax Regime Calculator makes this comparison effortless. Enter your income and deductions, and get an instant side-by-side verdict — completely free, no signup needed.

Pair this calculator with our salary calculator, TDS calculator, and tax saving calculator to take full control of your tax planning for FY 2026-27.

Try the old vs new tax regime calculator now — it is free, instant, and updated for the latest tax rules.