Two regimes, one decision
Since the new regime became the default, every salaried taxpayer in India faces the same yearly question: take the lower rates, or keep the deductions? There is no universally correct answer — it turns entirely on how much you actually claim.
The new regime for FY 2025-26 charges nothing up to ₹4 lakh and then steps up in ₹4 lakh bands to 30%, with a ₹75,000 standard deduction and a rebate that wipes out tax entirely up to ₹12 lakh of taxable income. The old regime starts taxing at ₹2.5 lakh and reaches 30% much sooner, but allows the deductions most people have spent years arranging their finances around.
The break-even number
Rather than guessing, work out how much you would need to deduct for the old regime to come out ahead. That is the figure this calculator shows, and it turns an abstract choice into a ten-second check: add up your provident fund, insurance premiums, ELSS, house rent allowance and home-loan interest, and compare. Below the break-even, the new regime wins; above it, the old one does.
Why the rebate creates a cliff, and what softens it
The section 87A rebate is all or nothing: taxable income of ₹12 lakh attracts no tax at all, while ₹12,00,001 attracts the full slab calculation. Left alone that would mean one extra rupee of income costing tens of thousands in tax — so marginal relief caps the additional tax at the additional income. The same mechanism applies at each surcharge threshold. This calculator applies marginal relief in both places, which is the most common thing missing from back-of-envelope estimates.
What is not modelled here
Capital gains are taxed under their own rates and are not included. Nor are the higher exemption limits for taxpayers over 60 under the old regime, professional tax, or employer contributions beyond the standard treatment. If a large part of your income is not salary, treat this as an indication and check the detail with someone who can see your full picture.