Income Tax Calculator 2026: New Regime vs Old Regime — Which Saves More?
Income tax calculator 2026: New vs Old tax regime comparison. Who benefits from new regime, impact of home loan deductions, HRA & how to calculate which saves more tax.
From April 2024, India's new income tax regime became the default option. Unless you explicitly opt for the old regime at the time of filing, the new regime's rates and rules apply automatically. For home loan borrowers, investors with PPF and ELSS, and HRA claimants — this choice can mean Rs 50,000 to Rs 2 lakh+ in annual tax difference.
This guide provides a clear framework to calculate which regime saves more tax for your specific income and deduction profile.
Old vs New Tax Regime: Rates at a Glance
Old Regime Tax Slabs (FY 2025-26)
| Income Range | Tax Rate |
|---|---|
| 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% |
| Surcharge (income > Rs 50 lakh) | 10-37% |
| Health & Education Cess | 4% |
Section 87A Rebate: Tax nil if total income ≤ Rs 5 lakh (old regime)
New Regime Tax Slabs (FY 2025-26)
| Income Range | Tax Rate |
|---|---|
| Up to ₹4,00,000 | Nil |
| ₹4,00,001 to ₹8,00,000 | 5% |
| ₹8,00,001 to ₹12,00,000 | 10% |
| ₹12,00,001 to ₹16,00,000 | 15% |
| ₹16,00,001 to ₹20,00,000 | 20% |
| ₹20,00,001 to ₹24,00,000 | 25% |
| Above ₹24,00,000 | 30% |
| Health & Education Cess | 4% |
Section 87A Rebate: Tax nil if taxable income ≤ ₹12 lakh (new regime, rebate up to ₹60,000). With the ₹75,000 standard deduction, salaried income up to ₹12.75 lakh pays no tax.
Deductions: Old Regime vs New Regime
| Deduction | Old Regime | New Regime |
|---|---|---|
| Standard Deduction (Salaried) | Rs 50,000 | Rs 75,000 |
| Section 80C (PPF, ELSS, LIC etc.) | Rs 1,50,000 | Not available |
| Section 80D (Health Insurance) | Rs 25,000 – Rs 1,00,000 | Not available |
| HRA (House Rent Allowance) | Available | Not available |
| Home Loan Interest 24(b) | Up to Rs 2,00,000 | Not available (self-occupied) |
| Home Loan Principal 80C | Within Rs 1,50,000 80C limit | Not available |
| Section 80EEA (first-time buyer) | Rs 1,50,000 | Not available |
| NPS (employer contribution 80CCD2) | Available | Available |
| LTA (Leave Travel Allowance) | Available | Not available |
The Break-Even Analysis: When Old Regime Wins
The break-even point is the total deductions level at which old regime tax = new regime tax.
For different income levels, the break-even total deductions are approximately:
| Gross Salary Income | Break-Even Total Old-Regime Deductions (incl. ₹50,000 standard deduction) |
|---|---|
| ₹10 lakh | ₹5,00,000 (new regime tax is nil) |
| ₹12 lakh | ₹7,00,000 (new regime tax is nil) |
| ₹15 lakh | ₹5,94,000 |
| ₹20 lakh | ₹7,59,000 |
| ₹25 lakh | ₹8,50,000 |
| ₹30 lakh | ₹8,50,000 |
Interpretation: If your income is ₹15 lakh and your total old-regime deductions exceed about ₹5.94 lakh, the old regime saves more. Below that, the new regime saves more. (FY 2025-26 slabs, before cess; surcharge not considered.)
Typical deduction stack for a home loan borrower (old regime):
- Standard deduction: ₹50,000
- Section 80C (PPF + ELSS + principal): ₹1,50,000
- Section 24(b) home loan interest: ₹2,00,000
- Section 80D (family health insurance): ₹25,000
- Total: ₹4,25,000
At every income from ₹10 lakh to ₹30 lakh, this stack is below the break-even level, so the new regime is cheaper for most salaried borrowers unless they also claim large HRA or other deductions.
Worked Examples: Old vs New Regime Tax Calculation
Example 1: Income ₹10 lakh, Home Loan Borrower
Old Regime:
- Gross income: ₹10,00,000
- Less standard deduction: (₹50,000)
- Less 80C: (₹1,50,000)
- Less 24(b) home loan interest: (₹1,80,000) [actual interest paid]
- Less 80D health insurance: (₹25,000)
- Taxable income: ₹5,95,000
- Tax: ₹12,500 + 20% × (5,95,000 − 5,00,000) = ₹12,500 + ₹19,000 = ₹31,500
- Plus 4% cess: ₹1,260
- Total tax: ₹32,760
New Regime:
- Gross income: ₹10,00,000
- Less standard deduction: (₹75,000)
- Taxable income: ₹9,25,000
- Tax before rebate: 5% × ₹4,00,000 + 10% × ₹1,25,000 = ₹20,000 + ₹12,500 = ₹32,500
- Less Section 87A rebate (taxable income ≤ ₹12 lakh): (₹32,500)
- Total tax: Nil
New regime saves: ₹32,760 even with the home loan deductions.
Example 2: Income Rs 15 lakh, Home Loan Borrower with Maximum Deductions
Old Regime:
- Gross income: Rs 15,00,000
- Less standard deduction: (Rs 50,000)
- Less 80C: (Rs 1,50,000)
- Less 24(b) interest: (Rs 2,00,000)
- Less 80D: (₹50,000) [senior parent premium]
- Taxable income: ₹10,50,000
- Tax: ₹1,12,500 + 30% × (10,50,000 − 10,00,000) = ₹1,12,500 + ₹15,000 = ₹1,27,500
- Plus 4% cess: ₹5,100
- Total tax: ₹1,32,600
New Regime:
- Gross income: ₹15,00,000
- Less standard deduction: (₹75,000)
- Taxable income: ₹14,25,000
- Tax: 5% × ₹4,00,000 + 10% × ₹4,00,000 + 15% × ₹2,25,000 = ₹20,000 + ₹40,000 + ₹33,750 = ₹93,750
- Plus 4% cess: ₹3,750
- Total tax: ₹97,500
New regime saves: ₹35,100 at this income level even with all deductions claimed.
Example 3: Income Rs 20 lakh, Maximum Deductions
Old Regime:
- Gross income: Rs 20,00,000
- Deductions: Standard Rs 50,000 + 80C Rs 1,50,000 + 24(b) Rs 2,00,000 + 80D Rs 50,000 = Rs 4,50,000
- Taxable: Rs 15,50,000
- Tax: Rs 1,12,500 + 30% × Rs 5,50,000 = Rs 2,77,500
- Plus 4% cess: Rs 11,100
- Old Regime Tax: Rs 2,88,600
New Regime:
- Gross income: ₹20,00,000
- Standard deduction: (₹75,000) → Taxable: ₹19,25,000
- Tax: 5% × ₹4,00,000 + 10% × ₹4,00,000 + 15% × ₹4,00,000 + 20% × ₹3,25,000 = ₹20,000 + ₹40,000 + ₹60,000 + ₹65,000 = ₹1,85,000
- Plus 4% cess: ₹7,400
- New Regime Tax: ₹1,92,400
New regime saves: ₹96,200 at ₹20 lakh income even with maximum deductions.
The Home Loan Impact: Critical Analysis
For home loan borrowers, the new regime's elimination of Section 24(b) (up to Rs 2 lakh interest deduction) is the biggest disadvantage:
| Income | Annual Saving from 24(b) Deduction (Old Regime) |
|---|---|
| Rs 10 lakh (20% bracket) | Rs 40,000 (Rs 2 lakh × 20%) |
| Rs 15 lakh (30% bracket) | Rs 60,000 (Rs 2 lakh × 30%) |
| Rs 20 lakh (30% bracket) | Rs 60,000 (Rs 2 lakh × 30%) |
This deduction is valuable, but after the FY 2025-26 slab changes it is usually not enough on its own to make the old regime cheaper — run both calculations with your full deduction list.
For detailed home loan tax deduction planning, see our home loan tax benefits guide.
Decision Framework: Which Regime for You?
Choose the NEW regime if:
- Salaried income is up to ₹12.75 lakh (zero tax after the rebate)
- Your total old-regime deductions are below roughly ₹6 lakh
- You are young with limited investments and no home loan
- You prefer simplicity and don't want to track deductions
- Your employer is your only income source with no business income
Choose the OLD regime if:
- Your combined deductions (home loan interest, 80C, HRA, 80D, NPS and others) exceed the break-even threshold for your income — roughly ₹6-8.5 lakh
- You claim a large HRA exemption in a metro city on top of home loan and 80C deductions
Action step: Calculate your tax under both regimes each April. The regime that minimises your tax liability is the right choice — and the optimal answer can change from year to year. Many salaried employees switch to the old regime in years when they have high home loan interest deductions.
For personalised tax planning integrated with your home loan financial plan, contact Money Matrix Hub.
Frequently Asked Questions
What is the difference between the new and old income tax regime?
What are the income tax slab rates under the new regime in FY 2025-26?
Who should choose the old tax regime?
Who should choose the new tax regime?
Does the new regime allow home loan interest deduction?
What is the break-even income for old vs new regime with home loan?
Can I switch between old and new tax regime every year?
What is Section 87A rebate and who gets it in 2026?
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