Old or new tax regime: compare the tax, not just the slab

A regime comparison starts with the same income and two different tax calculations. It does not start by choosing the regime with the lower headline rate or adding up every investment you made. The useful question is how much eligible income remains taxable in each regime, and what tax follows after reliefs.

This guide accompanies the old versus new income-tax calculator for FY 2025–26 / AY 2026–27. Its supported case is a resident individual under 60 with ordinary salary and slab-rate income, limited to ₹50 lakh gross income. It excludes capital gains, business income, special-rate income and surcharge cases.

Gather numbers that belong together

Use annual gross salary including HRA, ordinary taxable interest or other supported income, and eligible old-regime deductions after applying their individual limits. Do not use CTC as salary when it contains employer contributions or benefits that are not cash salary. Keep your salary statement and deduction evidence beside the calculation.

Calculate an eligible HRA exemption separately using the HRA calculator. Enter that exemption in its own field. Do not enter total rent as a deduction and do not count HRA again inside the aggregate deduction field. The calculator applies the standard deduction itself.

Follow the calculation in order

1. Start with salary and other supported ordinary income.
2. Apply deductions that the chosen regime permits.
3. Calculate tax progressively through the slabs.
4. Apply eligible resident rebate and rebate marginal relief.
5. Add health and education cess.

The Income Tax Department’s AY 2026–27 guide provides the applicable slab and cess context. Use the detailed breakdown in the tool to see each stage rather than reading only the final winner.

Why the rebate threshold matters

For the supported ordinary-income case, new-regime taxable income of ₹12 lakh qualifies for a rebate that eliminates its slab tax. Salary of ₹12.75 lakh can reach that taxable amount after the ₹75,000 standard deduction when there is no other income. This is not a universal tax-free salary statement: adding taxable interest or special-rate income can change the answer.

Just above the threshold, rebate marginal relief prevents an abrupt full-slab charge. The official CBDT Budget FAQs explain this relief. The calculator displays it separately from the rebate.

Use the deduction-to-match result carefully

If the new regime is cheaper, the tool estimates the extra old-regime deduction that would make the two tax amounts equal. It does not establish that such a deduction is available. A large threshold can show that further comparison is unlikely to help, rather than suggesting that you should buy a product or spend money.

Compare actual eligible claims first. Tax savings alone do not measure whether an investment, insurance policy or housing decision suits you. You can then use the take-home salary calculator to see how estimated annual tax affects cash after employee payroll deductions.

When to leave this calculator

Use a fuller computation if you have capital gains, crypto or lottery income, employer-NPS deductions, arrears relief, non-resident status, senior-citizen rules or income above the supported range. This page is deliberately year-specific; do not reuse its output for a different financial year without verifying the rules.