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Income Tax Calculator for FY 2025-2026

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Income Tax Calculator helps you quickly and accurately estimate how much tax you need to pay without dealing with complex calculations or confusing tax rules. Many individuals struggle to understand their tax liability due to multiple income sources, deductions, and frequent changes in tax laws, which often leads to errors or last-minute stress. This is exactly why you need an income tax calculator-it gives you instant clarity on your taxable income, compares tax liability under the old and new tax regimes, and helps you plan your finances better throughout the year. By using an income tax calculator, you save time, avoid costly mistakes, and make informed decisions to optimize your tax savings with confidence.

This guide includes a step-by-step process of calculating income tax with examples (old vs. new regime) and the benefits of using an online income tax calculator.

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 different inputs like annual income, allowances, expenses, rent, EMIs on loans, 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 from salary or other income is mandatory for all, and by using a free income tax calculator, employees can get an estimated amount for their income tax, which can be useful while filing for the 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. This tool 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 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 annual gross income and exemptions u/s 10 A, if applicable. This includes Leave Travel Allowance (LTA) and House Rent Allowance (HRA).
• Step 4: In standard deduction, net income from a sale of an asset should be calculated, for which the formula is (Sale consideration – Cost of Acquisition).
• Step 5: Other details, like interest on income 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.

How to Calculate Income Tax on Salary with Example?

Nayan works in Delhi and earns a basic monthly salary of ₹80,000, plus an HRA of ₹20,000 per month and a yearly LTA of ₹40,000. He lives in a rented house and pays ₹15,000 in rent. His additional income from other sources is ₹2,00,000.

Nayan’s gross taxable income from the above figures will be:

Here are the deductions from gross income to compute the total tax payable.

As you can see in the above table, the income tax is calculated under both the new and old tax regimes. We can clearly see a difference in total tax payable amounts, even though the tax rates were higher in the old regime; the tax payable was lower than in the new regime because of the deduction benefits in the old regime.

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)

Exemptions & Deductions Allowed under the Old Tax Regime

Earlier. We mentioned that the old regime allows major exemptions and deductions that could help reduce the tax amount. Through the following list, you can know what the exemptions & deductions that are allowed under the old tax regime are:

• House rent allowance & Leave travel allowance are tax-exempt.
• Section 80C – Deductions up to ₹1.5 lakh on tax-saving investments.
• Section 80EE – Deduction on interest paid for home loans availed from any financial institution.
• Section 80G – Deduction on donations made to charity.
• Section 80E – Deduction on interest paid for educational loans for higher studies.
• Section 80GGC – Deduction on the contribution made towards any political party.
• Section 80D – Deduction on health insurance premium & medical expenses.
• Section 80TTA – Deduction up to ₹10,000 on the income earned from interest on a savings account.
• All salaried individuals can claim a standard deduction of ₹50,000.

Exemptions & Deductions Allowed under the New Tax Regime

The new tax regime allows fewer deductions & exemptions compared to the old regime, but they are still useful for reducing total income tax. The following are the exemptions & deductions allowed under the new tax regime:

• Section 80CCD(2) – deduction on employer’s contribution towards NPS.
• Tax exemption on interest earned and the maturity amount of the PPF Account and the Sukanya Samridhi Yojana.
• Section 10(10D) – Tax exemption on maturity amount from life insurance.
• Section 10(15) – Deduction on interest earned from a post office savings account.
• Tax exemption on income received from leave encashment on retirement.
• Tax exemption if the individual opts for voluntary retirement.

Benefits of Using an Online Income Tax Calculator

There are multiple benefits of using an online income tax calculator India. These are:

Saves Time and Effort

Individuals can save time and effort by avoiding hours of calculating complex tax figures. They can get an instant tax liability estimate in a few clicks with basic financial information.

Eliminates Manual Calculation Errors

Online calculators apply the latest tax laws and slab rates, which eliminates errors caused by manual calculations.

Helps with Tax Planning

When employees know their estimated tax liability in advance, it can help them plan their budget and make informed decisions. These decisions include their savings and expenses throughout the year.

Supports Investment Decisions

This calculator helps employees understand the various deductions and exemptions (under Sections 80C and 80D) they are eligible for. Some of the tax-saving investments, like ELSS and life insurance, can help minimize the tax burden.

Improves Financial Clarity

The tool helps improve financial clarity by providing an accurate estimate of an employee’s liability. This helps in budget planning and identifying tax-saving opportunities.

Free and Accessible Anytime

These online tools are designed to be simple; they can be calculated without expert knowledge. They are also accessible from any device with an internet connection at any time.

How Much Tax is Deducted from Salary in India?

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 deducting exemptions (standard deduction of ₹75,000) under the new 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; compared to the new regime, the percentages 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 latest version includes lower deductions when compared to the older one.

Exemptions and Deductions

The new regime allows limited exemptions, for example, standard deduction (₹75,000) and employer NPS (14% of salary). The old version included thorough calculations, for example, 80C (₹1.5L) and 80D health insurance.

Other Income/Losses Declared to the Employer

Employees can report income (capital gains and business profits) and losses (house property), which reduces their Tax Deducted at Source (TDS).

Simplify Your Tax Calculations with factoHR’s Income Tax Calculator

Employees can simplify their tax calculations with factoHR’s income tax calculator, designed to deliver quick and accurate results as per Indian tax rules. Simply enter income details, along with deductions and exemptions, to generate estimated tax figures. The tool supports multiple income categories and helps you calculate tax under the new regime for FY 2025–26 using the latest slabs.

For organizations, this doesn’t have to remain a manual process. With factoHR payroll software, income tax calculations are automatically handled for every employee, including deductions, exemptions, and compliance updates. This reduces manual effort, eliminates errors, and ensures accurate payroll processing every month.

FAQs

What Information do I Need to Use the Calculator?

To use the income tax calculator, you need:

• Provide your gross income
• Your age group and financial year
• Applicable deductions or exemptions (for the old regime)
• Fewer details (for the new regime)

Who Can Use this New Tax Regime Calculator?

The new regime calculator can be used by individuals and salaried employees. This also includes those individuals with income from other sources, as there are multiple tax-related comparison options with minimal deductions.

Does It Include the Latest Tax Slabs?

Yes, factoHR’s income tax calculator 2025-26 includes the latest slabs, i.e., FY 2025-26 new regime rates. It is advised to verify these slabs with the official income tax portal.

What are the Key Components and Terminologies of Income Tax?

Some of the key tax components include:

• Gross total income (salary, house property, capital gains)
• Deductions (80C, 80D in the old regime)
• Exemptions (HRA and LTA), tax slabs

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

When an individual is confused about choosing between 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.

Can I Use this Calculator for Tax Planning before Investments?

Individuals can use this calculator before planning investments, for example, ELSS under 80C in the old regime, which helps in forecasting savings.

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 tax amount is not final for filing the ITR, as the calculator provides an estimate. This should only be used as a guide, as the final amount includes audits and revisions.

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