Income Tax Calculator for FY 2025 - 26: Old vs New Regime

Pre-plan your income tax liability and select the most suitable tax regime with Stockgro's income tax calculator in FY 2025-26.

People in the taxable income bracket are required to pay a certain percentage of their net annual income in taxes. Income tax can be paid either through the Central Board of Direct Taxes (CBDT)'s income tax returns site or as tax deducted at source when a monthly salary is paid. The IRS has allowed online tax payment to guarantee that people pay their required taxes on any income derived from other sources.

The income tax calculator is an efficient tool for calculating this tax liability, along with different exemptions and deductions based on new and old regimes. Taxpayers can also use this tool to select a suitable regime. Explore more to understand how to use the income tax calculator for the new regime, FY 2025-26, and the old regime.

How can I use the FY 2025-26 income tax calculator?

The steps to utilise the tax calculator are as follows:

1. Choose your age appropriately. In India, the different age groups have different tax obligations.
2. Enter your taxable pay, which is your income less any applicable exemptions like HRA, LTA, etc. (If you want to see how much tax you owe based on the previous tax slabs)
3. Otherwise, simply input your pay, that is, your income, without taking advantage of any exemptions like HRA, LTA, professional tax, etc. (If you are interested in knowing what your tax obligation is under the new tax slabs)
4. In addition to your taxable income, you must include information on your interest income, rental income, house loan interest paid for properties rented out, and self-occupied property loan interest paid.
5. Enter the annual income considering salary, rental income, freelance income, business income, etc.
6. Select 'Go to Next Step' once again.
7. You must input your tax-saving investments under sections 80C, 80D, 80G, 80E, and 80TTA if you want to compute your taxes using the old tax slabs.
8. To calculate your tax liability, select 'Calculate'. A comparison of your pre-budget and post-budget tax liabilities (old tax slabs and new tax slabs) will also be available.

Note: You can enter '0' in any field that is not applicable.

What's new in the FY 2025-26 income tax rules?

In the Union Budget 2025, a new tax regime was introduced, which is applicable from FY 2025-26. The new regime was made the default in the Finance Act 2023. However, the new tax regime applicable from FY 2025-26 made some crucial changes regarding tax slabs, rates, rebates, etc.

• Basic exemption limit increased from ₹3 lakhs to ₹4 lakhs
• It increased the threshold of marginal tax-free income from ₹7 lakhs to ₹12 lakhs.
• This income does not include capital gains; they are charged separately as per capital gains norms, asset type and holding period.
• Rebate under section 87A was increased from ₹25,000 to ₹60,000.
• The standard deduction for salaried individuals is increased to ₹75,000 in the Union Budget 2024. It increased the tax relief threshold for salaried employees up to ₹12.75 lakhs.

Key differences between old and new regimes for FY 2025-26

A major difference between the old and new tax regimes is the availability of different exemptions and deductions. Some key points that can differentiate between these regimes are as follows:

An income tax calculator can help calculate the potential tax liability under both these regimes and select the most suitable one for taxpayers.

Must read: New Income Tax Bill and Tax Slabs Update

What are the exemptions/deductions that the new tax regime forbids?

Individuals or HUFs that choose to be taxed under the Act's newly added section 115 BAC are not eligible for the following exemptions:

• Abandon the travel allowance described in section 10(5);
• The house rent allowance described in section 10(13A);
• Other allowances described in section 10(14)
• A transport allowance given to a Divyang employee to cover the cost of travelling between their location of abode and their place of employment.
• Conveyance Allowance, which is given to cover transportation costs incurred while carrying out official tasks;
• Any allowance given to cover travel expenses for tours or transfers;
• A daily allowance to cover any regular daily expenses incurred by an employee when away from his regular location of duty.
• The allowances for MPs and MLAs described in section 10(17);
• The allowance for the minor's income described in section 10(32);
• Section 10AA's exemption for SEZ units;
• The section 16-required deduction for employment/professional tax and entertainment allowance;

Moreover, the following deductions are unavailable under the new tax regime:

• Interest under Section 24 in relation to empty or self-occupied property mentioned in Section 23(2). (Loss under the heading 'Income from House Property for the rented house shall not be permitted to be set off under any other heading and is to be carried forward as per the law currently in effect);
• Additional depreciation in accordance with Section 32(1), Clause (ii(a));
• Deductions made pursuant to Sections 32AD, 33AB, and 33ABA;
• A variety of deductions for contributions to or expenditures for scientific research are described in subparagraphs (ii), (ii(a)), (iii), or (iii) of subparagraph (1) or (ii) of subparagraph (2AA) of section 35;
• A deduction made pursuant to sections 35AD or 35CCC;
• The family pension is deducted in accordance with section 57(ii(a));
• Every chapter VIA deduction (such as those found in sections 80C, 80CCC, 80CCD, 80D, 80DD, 80DDB, 80E, 80EE, 80EEA, 80EEB, 80G, 80GG, 80GGA, 80GGC, 801A, 80-IAB, 80-IAC, 80-IB, 80-IBA, etc.). Deductions under section 80CCD(2) (employer payment on behalf of the employee in a notified pension system) and section 80JJAA (for new employment) can be made, nevertheless.

Income tax slabs comparison for FY 2025-26

The different slabs and rates under both income tax regimes should be understood in detail to simplify the complexities of tax payment.

New income tax regime

This regime doesn't allow all the deductions and exemptions. However, some exceptions are as follows:

• The standard deduction for salaried employees and family pension income.
• Employee and employer's contribution to the National Pension System (NPS) under section 80CCD (1) and 80CCD (2).
• Benefits from life insurance under section 10(10(D)) can be exempted from fulfilling the required conditions.
• Agriculture income is also exempted under this regime.

Old income tax regime

Almost all the deductions and exemptions can be claimed under this regime.

Learn with an example!

Assume, Ms ABC is a salaried individual aged less than 60 years and has a total taxable income of ₹13 lakhs. She also pays a life insurance premium of ₹50,000 (included in this income). Her tax liability can be calculated under both regimes as follows:

This complex calculation can be easily simplified with the help of the old tax regime calculator and the new tax regime calculator.

Do check this out! Form 10-IE: Choosing New Tax Regime under Income Tax Act

Tax planning tips for FY 2025-26

Taxpayers can follow some of the following tips to reduce their overall tax liability for the financial year:

• The same tax regime may not suit every taxpayer. Evaluate the potential tax liability according to both regimes to select the most suitable one.
• Use the rebate under section 87A wisely. In the new tax regime, it can help nullify the total tax amount up to ₹12 lakhs.
• Investments like National Savings Certificate, Public Provident Fund, etc., can be helpful in tax-saving. In case of suitable allowances and deductions, taxpayers can opt for the old tax regime.
• File your income tax returns on time to get the advance tax benefit or avoid tax penalties.

Also, explore: How to do tax planning for high-income earners?

Should you switch regimes this year?

The new tax regime for FY 2025-26 is accompanied by several benefits, like multiple tax slabs and lower tax rates. Taxpayers with high taxable income and a lower number of deductions/exemptions may find this regime beneficial. One should also calculate their liability with a new tax regime calculator to make an informed decision.

Moreover, taxpayers with income from business and profession should be vigilant while selecting the tax regime as it can be switched only once in the lifetime. For individuals with non-business income, the option to switch income tax regime is available every year.

Conclusion

The new tax regime for FY 2025-26 offers varied benefits to taxpayers. However, one should check their tax liability under both regimes to determine their suitability. Individuals can use an income tax calculator to determine the final tax amount based on the applicable deductions, exemptions and rebate amount. It can simplify the calculation and reduce human errors.

Income Tax Calculator FAQs

How can I calculate my income tax?

Income tax can be calculated by using the formula: sum of basic salary+HRA+special allocances+ transport allowances+any other allowances. Moreover, one can also check out the income tax calculator to simplify the calculations.

Does everyone have to file their income tax returns?

No, the income tax return is not necessary if your income is below the basic exemption threshold as per the concerned regime. However, people who earn less than ₹2.5 lakhs (as per the old regime) and ₹4 lakhs (as per the new regime) but still want an income tax refund must file an ITR for the same. Otherwise, it is required to file income tax returns if it exceeds the basic exemption limit.

Which tax slab is better?

The new tax regime may be beneficial for individuals with annual incomes up to ₹12.75 lakhs, especially if they have fewer deductions or exemptions to claim. However, if a taxpayer has significant deductible expenses or eligible allowances, the old tax regime might offer more savings. Choosing the right regime depends on an individual's specific financial situation.

How can I reduce my income tax?

Ways to Reduce Your Income Taxes

• Invest in items covered by section 80C.
• Purchase health insurance.
• Submit a deduction request for your housing allowance.
• Deduct the interest on your mortgage.
• Don't spend all of your savings.
• Donate to a good cause.