What is the Income Tax Calculator?
Income tax is usually charged in slabs. Income up to a threshold is taxed at one rate, the next band at a higher rate, and so on. A common misreading is that crossing into a higher band taxes your whole income at that rate — it does not. Only the portion above the threshold is charged at the higher rate.
This calculator applies the FY 2026-27 slabs for the new or the old regime, with the standard deduction, the section 87A rebate, surcharge on high incomes and cess. It is a planning estimate, not a filing computation: capital gains and other income taxed at special rates are left out.
What each input means
- Annual income
- Your total income for the year that is taxed at slab rates: salary, interest, rent and similar income, before deductions.
- Tax regime
- The new regime is the default, with lower rates and few deductions. The old regime has higher rates but allows deductions such as 80C, 80D and home loan interest.
- Is this salary or pension income?
- Salaried people and pensioners get a standard deduction, which is larger under the new regime.
- Old-regime deductions
- Deductions you claim under the old regime. They have no effect when the new regime is selected.
- Age
- Senior and super senior citizens get a higher tax-free band under the old regime. The new regime does not vary by age.
How this calculation works
Deductions are subtracted from gross income to give taxable income. That figure is then divided across the slab bands, with each portion charged at the rate applying to its band, and the results summed. A cess or surcharge is applied on top where relevant.
This is why marginal and effective rates differ. Your marginal rate is what applies to the next unit of income you earn; your effective rate is total tax divided by total income, and is always lower under a progressive system.
Formula: Tax = slab tax − section 87A rebate + surcharge, plus 4% cess
Getting the most out of the result
- Claim every deduction you are genuinely entitled to before assuming your tax bill is fixed. Deductions reduce taxable income directly.
- Understand your marginal rate. It tells you what an extra unit of income costs and what a further deduction actually saves.
- Where alternative tax regimes exist, compute both before choosing. The one with lower headline rates is not always cheaper once deductions are considered.
- Check whether tax deducted at source already covers your liability, to avoid a shortfall or an unnecessary refund cycle.
- Keep documentation for anything claimed. A deduction you cannot evidence is a liability rather than a saving.
Common mistakes to avoid
The most widespread misunderstanding is fearing a move into a higher slab as though it would tax all income at that rate — only the excess is affected, so earning more never leaves you worse off under a standard progressive system. People also confuse marginal with effective rate, overestimating what they actually pay. Others claim deductions without retaining evidence, or ignore income from interest and capital gains that must be included. Tax rules and slab structures change regularly, so any calculator model ages.
Frequently asked questions
Does crossing into a higher slab tax all my income at that rate?
No. Only the income above the threshold is charged at the higher rate. Everything below continues to be taxed at the lower band rates, so earning more always leaves you with more after tax.
What is the difference between marginal and effective rate?
Marginal rate is the rate charged on your next unit of income — the top band you reach. Effective rate is total tax divided by total income. Under a progressive system the effective rate is always lower than the marginal rate.
Are the slabs in this calculator current?
They follow the rules for FY 2026-27, which Budget 2026 left unchanged from the year before. Slabs, the rebate and surcharge are revised in budgets, so check the year you are filing for before relying on the figure.
What counts as a deduction?
It varies by jurisdiction and regime, but commonly includes specified investments, insurance premiums, retirement contributions, certain loan interest, and prescribed allowances. Eligibility and limits change, so check current provisions.
Should I choose a regime with lower rates but fewer deductions?
Compute your liability under each. If you claim substantial deductions, the higher-rate regime that permits them can work out cheaper. If you claim few, the lower-rate regime usually wins. The answer is arithmetic, not preference.
Does this include tax deducted at source?
No. It estimates total liability. If tax has already been deducted from your salary or other income, your remaining payable is the liability minus what has been deducted.
Is capital gains income included?
Not here. Capital gains are frequently taxed under separate rules and rates depending on the asset and holding period. Use the capital gains tax calculator for that and add the result to your overall position.
Guides that go deeper
- Old vs New Tax Regime: A Worked Walkthrough
- How HRA Exemption Is Worked Out
- From CTC to Take-Home: How a Salary Offer Turns Into Cash
- How Capital Gains Are Taxed on Shares, Funds and Property