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Income Tax Calculator for FY 2025-26

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This income tax calculator estimates your tax liability for FY 2025-26 (AY 2026-27) by comparing the old and new tax regimes side-by-side. By inputting your gross salary, deductions, and exemptions, you can instantly identify which regime offers greater tax savings.

The guide below also explains how the calculation works step by step, walks through a salary example under both regimes, and lists the deductions that apply this year.

What is an Income Tax Calculator?

An income tax calculator is a simple online tool that calculates income tax under the current tax system in India. This calculator takes inputs like annual income, allowances, expenses, rent, loan EMIs, and other tax deductions & exemptions. This also includes tax-saving investments to provide individuals with an estimated tax figure that they are liable to pay.

Whether you are an individual or a business entity, paying income tax on salary or other income is mandatory. By using a free income tax calculator, employees can get an estimated amount for their income tax, which can be useful when filing their income tax return.

Income Tax Calculator

How to Calculate Income Tax?

An online income tax calculator is a simple tool for both HR professionals and employees. It is designed to provide results based on user input, for example, annual income, along with deductions and exemptions. Below are the steps to use an income tax calculator for AY 2026-27:

• Step 1: HR professionals/individuals should first choose the financial year for which they want their taxes to be calculated.
• Step 2: Choose the income tax payee’s age and type, as the tax regimes (old and new) differ.
• Step 3: Enter your annual gross salary along with eligible exemptions under Section 10, like HRA tax exemption and Leave Travel Allowance (LTA).
• Step 4: Deduct the Standard Deduction applicable to your chosen regime to lower your taxable salary income.
• Step 5: Other details, like income from interest and rental income, should also be entered.
• Step 6: Some of the tax-saving investments under section 80D (health insurance) and 80CCD(1B) (NPS) should be entered, if applicable.

The income tax calculator online will evaluate, which can be compared with both the old and new tax regimes.

New Income Tax Slabs for FY 2025-26

Taxpayers in India pay taxes according to their income tax slabs. Tax slabs are different tax rates specified for different income ranges. It means that tax is charged according to the amount of income one earns. If an employee’s income is high, then they are liable to pay more in taxes compared to those who have less income. The tax slabs are:

Individuals (below the age of 60)

Senior citizens (between the ages of 60 and 80)

Super senior citizens (age over 80)

How to Calculate Income Tax on Salary with an Example?

Let’s understand income tax calculation with a salary example for FY 2025-26.

Assume Nayan is a salaried employee below 60 years of age and lives in Delhi. His salary and income details are:

For this example, assume Nayan can claim the following exemptions and deductions under the old tax regime:

So, Nayan’s taxable income will be:

Tax Calculation under the Old Tax Regime

Tax Calculation under New Tax Regime

In this example, the new tax regime is more beneficial because Nayan’s total tax payable is ₹88,140 under the new regime compared to ₹1,62,552 under the old regime.

However, the better regime can change depending on the employee’s deductions, exemptions, rent, investments, home loan interest, and other income. Therefore, salaried employees should compare both regimes before finalizing their tax declaration – a step that also helps avoid common income tax declaration challenges such as mismatched proofs or missed exemptions.

How ₹12 Lakh Income Becomes Tax-Free under the New Regime

Under the new tax regime for FY 2025-26, the government increased the Section 87A rebate. A resident individual can now claim a rebate of up to ₹60,000, which removes all tax on a taxable income of up to ₹12 lakh.

Salaried employees benefit even more, as the New Tax Regime grants them a Standard Deduction of ₹75,000, so a gross salary of up to ₹12.75 lakh still leaves ₹12 lakh of taxable income and attracts zero tax.

If taxable income marginally exceeds ₹12 lakh, the statutory marginal relief mechanism ensures that the incremental tax payable never exceeds the incremental income earned above the threshold. These benefits apply only to resident individuals who opt for the new regime.

Deductions and Exemptions Available under Old and New Tax Regimes

The old and new regimes treat deductions very differently – including how they tax certain non-taxable allowances like HRA and LTA. The table below compares the main ones for FY 2025-26 so you can see which regime suits your claims.

How Much Tax is Deducted from Salary in India?

Understanding payroll taxes in India starts with knowing the multiple factors on which tax is deducted from salary. There are multiple factors on which the tax is deducted from salary in India. These are:

Total Taxable Income and Salary Components

Total taxable income is calculated using gross salary (including HRA and bonuses) and a standard deduction of ₹75,000 under the new regime or ₹50,000 under the old regime.

Applicable Income Tax Slab Rates

There are updated tax slab rates in the new regime (FY 2025-26). Individuals can visit government websites to calculate.

Employee’s Age and Residential Status

Age affects the old-regime slabs; by contrast, the new regime’s slabs are uniform across age groups. Also, residential status (resident/non-resident) impacts exemptions.

Choice of Tax Regime (Old vs. New)

The new tax regime is the default, but employees can choose between the old and new regimes for filing ITRs. The New Regime features lower tax rates but restricts access to most legacy deductions.

Exemptions and Deductions

The new regime allows limited exemptions, for example, standard deduction (₹75,000) and employer NPS contributions under Section 80CCD(2) (14% of salary). The old version included thorough calculations, for example, Section 80C (up to ₹1.5 lakh) and Section 80D (health insurance premiums).

Other Income/Losses Declared to the Employer

Employees can declare additional income sources (capital gains and business profits) and losses (house property), which realigns their monthly TDS (Tax Deducted at Source) – highlighting the difference between payroll tax vs income tax, since TDS on salary is only part of an individual’s overall tax liability.

FAQs

How do I Calculate Income Tax for FY 2025-26?

Find your gross total income across all sources; next, deduct eligible exemptions and deductions you qualify for, such as the ₹75,000 standard deduction under the new regime, then apply the FY 2025-26 slab rates to the remaining taxable income.

How to Ensure Error-Free Income Tax Return Filing?

Match every income source and TDS entry against your Form 26AS and Annual Information Statement (AIS) before you file, so your return agrees with the department’s records.

What are the Eligibility Criteria to File Income Tax?

You must file if your gross total income before deductions crosses the basic exemption limit, which is ₹4 lakh under the new regime and ₹2.5 lakh under the old regime for people below 60.

Who Should File Their Income Tax Returns?

Beyond those above the exemption limit, you must also file if you hold foreign assets, deposit over ₹1 crore in a current account, spend over ₹2 lakh on foreign travel, or run up an electricity bill above ₹1 lakh.

How do I Choose between the New and Old Tax Regimes?

When an individual is confused about choosing between the new and old tax regimes, it is best to select the new regime. This is because the deductions are low and are simple when compared to the old regime.

What is the Difference between FY and AY in Tax Calculation?

Financial Year (FY) is the income-earning period (April 1 to March 31), and Assessment Year (AY) is for filing (AY 2026-27 for FY 2025-26 income, due July 31). Organizations and HR teams should know that taxes are calculated on FY income during AY.​

Which Tax Regime is Better for Salaried Employees?

The new regime is more beneficial for salaried employees, with lower deductions and a standard deduction of ₹ 75,000. The old regime is suitable for those with high claims, for example, rent and insurance.

Is the Calculated Tax Amount Final for Filing My ITR?

The calculated tax amount is accurate for reference, but you should verify the final tax liability using your Form 16, Form 26AS, Annual Information Statement, advance tax payment details, deductions, and other supporting documents before filing your income tax return.

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