Income Tax Regime Breakeven Finder (Budget 2024–2026)
Find the exact deduction threshold where the Old Tax Regime beats the New Tax Regime. Calculate Section 87A marginal relief and download your employer declaration summary.
1. Gross Annual Salary / Total Income
2. Deductions Available Under Old Regime
With your current deductions of ₹2,75,000, New Regime yields ₹67,600 tax vs ₹96,200 under Old Regime.
Deduction Breakeven Threshold
₹3,95,000Side-by-Side Tax Computation Sheet
| Particulars | New Regime | Old Regime |
|---|---|---|
| Gross Annual Income | ₹12,00,000 | ₹12,00,000 |
| Standard Deduction | -₹75,000 | -₹50,000 |
| Chapter VI-A / 24b / HRA | Nil | -₹2,25,000 |
| Net Taxable Income | ₹11,25,000 | ₹9,25,000 |
| Base Slab Tax | ₹65,000 | ₹92,500 |
| Section 87A Rebate / Relief | ₹0 | ₹0 |
| 4% Health & Education Cess | ₹2,600 | ₹3,700 |
| Total Tax Payable | ₹67,600 | ₹96,200 |
Section 1: Income Tax Slab Comparison (Budget 2024–2026)
The Union Budget revised the New Tax Regime (Section 115BAC) slabs and increased the Standard Deduction for salaried taxpayers from ₹50,000 to ₹75,000. The Old Tax Regime remains unchanged with ₹50,000 standard deduction and pre-existing slabs.
| Income Slab | New Tax Regime Rate (Budget 2024) | Old Tax Regime Rate (< 60 Years) |
|---|---|---|
| Up to ₹2,50,000 | Nil (0%) | Nil (0%) |
| ₹2,50,001 to ₹3,00,000 | Nil (0%) | 5% |
| ₹3,00,001 to ₹5,00,000 | 5% | 5% |
| ₹5,00,001 to ₹7,00,000 | 5% (100% Rebate u/s 87A) | 20% |
| ₹7,00,001 to ₹10,00,000 | 10% | 20% |
| ₹10,00,001 to ₹12,00,000 | 15% | 30% |
| ₹12,00,001 to ₹15,00,000 | 20% | 30% |
| Above ₹15,00,000 | 30% (Max Surcharge 25%) | 30% (Max Surcharge 37%) |
Section 2: Mathematical Deduction Breakeven Formula
The Breakeven Deduction Threshold is the minimum cumulative deductions an individual must claim (including 80C, 80D, 24b, HRA, NPS, and ₹50,000 standard deduction) such that the Old Regime tax equals the New Regime tax.
\[ \text{Tax}_{\text{Old}}(\text{Gross} - D_{\text{breakeven}}) = \text{Tax}_{\text{New}}(\text{Gross} - ₹75,000) \] Where \(D_{\text{breakeven}}\) is the total deduction target (Standard Deduction + Chapter VI-A).
If your total available deductions exceed \(D_{\text{breakeven}}\), the Old Tax Regime is advantageous. If your deductions fall below this threshold, the New Tax Regime saves more money without locking your funds into lock-in investment schemes.
Section 3: Understanding Section 87A Marginal Relief
Under the New Tax Regime, taxable income up to ₹7,00,000 (Gross ₹7,75,000 for salaried) is 100% tax-free due to Section 87A rebate of ₹25,000. For individuals earning slightly above ₹7,00,000 (between ₹7,00,001 and ₹7,27,778), the Income Tax Act provides Marginal Relief so that the tax payable does not exceed the incremental income earned above ₹7 Lakh.
If \(\text{Taxable Income} > ₹7,00,000\) and \(\text{Base Tax} > (\text{Taxable Income} - ₹7,00,000)\):
\[ \text{Section 87A Relief} = \text{Base Tax} - (\text{Taxable Income} - ₹7,00,000) \]
\[ \text{Net Tax Payable} = (\text{Taxable Income} - ₹7,00,000) + 4\%\text{ Cess} \]
Section 4: Employer Tax Declaration vs ITR Switch Rule
Salaried employees can declare their preferred regime to their employer in April for TDS deduction. Under Section 115BAC(6):
- Flexibility for Salaried Taxpayers: Even if you selected the Old Regime with your employer (or vice-versa), you are permitted to switch your tax regime at the time of filing your Income Tax Return (ITR-1 / ITR-2) on or before the due date (July 31).
- No Lock-in for Salary Income: Salaried individuals can switch between New and Old regimes every financial year depending on their deduction portfolio.
- Business / Professional Income Restriction: Individuals with business or professional income (ITR-3 / ITR-4) can only opt out of the New Regime once in their lifetime (via Form 10-IEA).
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