Calculate your income tax in seconds
Compare India’s old and new tax regimes, or use the generic progressive calculator for another country. Every number updates instantly as you type.
Old Regime
- Taxable income
- ₹0
- Tax (before rebate)
- ₹0
- Rebate (87A)
- ₹0
- Surcharge
- ₹0
- Health & Education Cess
- ₹0
- Effective rate
- 0%
- Marginal rate
- 0%
New Regime
- Taxable income
- ₹0
- Tax (before rebate)
- ₹0
- Rebate (87A)
- ₹0
- Surcharge
- ₹0
- Health & Education Cess
- ₹0
- Effective rate
- 0%
- Marginal rate
- 0%
Take-home pay (based on selected regime above)
Tax bracket visualization
Detailed breakdown
Export & share
- Federal tax
- $0
- State tax (not modeled)
- $0
- Credits applied
- $0
- Effective rate
- 0%
- Marginal rate
- 0%
Take-home pay
Tax bracket visualization
Detailed breakdown
Export & share
How income tax works
Income tax is calculated in three broad steps. First, all your income from salary, interest, rent, capital gains, and business is added together to get your gross income. Second, eligible deductions and exemptions are subtracted to arrive at taxable income. Third, taxable income is run through a progressive rate schedule, where each slice of income is taxed at the rate set for that tier.
Taxable income vs. gross income
Gross income is everything you earn before any adjustments. Taxable income is what is left after subtracting deductions you are legally entitled to claim — things like a standard deduction, retirement contributions, or investment-linked deductions. Two people with identical gross income can owe very different amounts of tax depending on the deductions each one claims.
Old vs. New Tax Regime in India
India currently runs two parallel systems. The old regime keeps higher slab rates but allows a wide range of deductions and exemptions — Section 80C investments, 80D health insurance, home loan interest, and more. The new regime (the default since FY 2023-24) offers lower slab rates and a much higher tax-free threshold, but disallows nearly all of those deductions except a standard deduction and employer NPS contributions. Which one is cheaper depends entirely on how many deductions you can genuinely claim — this calculator runs both in parallel so you can compare directly.
How a progressive tax system works
In a progressive system, tax rates rise in tiers as income rises, but each tier only taxes the income that falls within it. If the first tier is taxed at 10% up to a threshold and the next tier at 20%, crossing into the 20% tier does not mean your entire income is now taxed at 20% — only the portion above the threshold is. This is why your effective (average) tax rate is always lower than your marginal (top-tier) rate.
General tax-saving tips
- Compare both regimes every year rather than assuming last year’s choice is still optimal — deduction amounts and slab rates both change.
- Use tax-advantaged retirement accounts where available; contributions often reduce taxable income today.
- Keep records of eligible deductions (insurance premiums, investment proofs, loan interest certificates) well before filing season.
- Review withholding or advance tax payments partway through the year to avoid a large balance due or an interest-free loan to the government via over-withholding.
- This is general information only — a qualified tax professional can advise on strategies specific to your situation.
Frequently asked questions
How is income tax calculated?
Income tax is calculated by taking your gross income, subtracting eligible deductions and exemptions to arrive at taxable income, then applying the tax rates for each bracket your taxable income falls into. Progressive systems tax only the portion of income within each bracket, not your entire income at one rate.
What is the difference between taxable income and gross income?
Gross income is your total income before any deductions. Taxable income is what remains after subtracting deductions and exemptions you are eligible to claim, such as standard deduction, Section 80C investments, or retirement contributions. Tax is calculated on taxable income, not gross income.
Which is better, the old or new tax regime in India?
It depends on how many deductions you claim. The new regime offers lower slab rates and a higher tax-free threshold but disallows most deductions. The old regime allows deductions like 80C, 80D, HRA and home loan interest but taxes income at higher rates. This calculator computes both and shows which one results in lower tax for your numbers.
What is a progressive tax system?
A progressive tax system taxes income in tiers, with each tier taxed at its own rate. As income rises, only the portion above each threshold is taxed at the higher rate for that tier, so your average (effective) tax rate is always lower than your top (marginal) rate.
What is the Section 87A rebate?
Section 87A gives resident individuals a rebate that reduces tax liability to zero up to a specified taxable income threshold. For FY 2025-26 and FY 2026-27, the new regime rebate applies up to ₹12 lakh taxable income (up to ₹60,000 rebate), and the old regime rebate applies up to ₹5 lakh (up to ₹12,500 rebate).
What is the difference between marginal and effective tax rate?
Marginal tax rate is the rate applied to your last rupee or dollar of taxable income, based on the highest bracket you reach. Effective tax rate is your total tax divided by your total income — the average rate you actually pay. The effective rate is always lower than the marginal rate in a progressive system.
Is standard deduction available in both tax regimes in India?
Yes. Salaried individuals and pensioners can claim standard deduction under both the old regime (₹50,000) and the new regime (₹75,000 from FY 2024-25 onward). It is not available to individuals with only business or professional income.
What is surcharge and when does it apply?
Surcharge is an additional charge on income tax for higher income levels, starting at 10% for taxable income above ₹50 lakh, rising to 15%, 25%, and (under the old regime only) 37% at higher thresholds. The new regime caps surcharge at 25% even for very high incomes.
What is Health and Education Cess?
Health and Education Cess is a flat 4% charge applied on top of your income tax plus any surcharge, used to fund government health and education initiatives. It applies to every taxpayer in India regardless of income level or regime.
Can I switch between the old and new tax regime every year?
Salaried individuals without business income can generally choose either regime each year when filing their return. Individuals with business or professional income have more limited switching options and should confirm current rules with a tax professional.