To explore the comparative effects of field sodicity (soil pH) and irrigation water residual alkalinity (RSC_iw) on physiological and biochemical attributes of salt tolerance, and crop performance of two wheat varieties (KRL 210, HD 2967), a total of 308 on-farm trials were carried out in sodicity affected Ghaghar Basin of Haryana, India. Salt tolerant variety KRL 210 maintained relatively higher leaf relative water content (RWC; 1.9%), photosynthetic rate (Pn; 5.1%), stomatal conductance (gS; 6.6%), and transpiration (E; 4.1%) with lower membrane injury (MII; −8.5%), and better control on accumulation of free proline (P; −18.4%), Na⁺/K⁺ in shoot (NaK_S; −23.1%) and root (NaK_R; −18.7%) portion compared to traditional HD 2967. Altered physiological response suppressed important yield-related traits revealing repressive effects of sodicity stress on wheat yields; albeit to a lesser extent in KRL 210 with each gradual increase in soil pH (0.77–1.10 t ha⁻¹) and RSC_iw (0.29–0.33 t ha⁻¹). HD 2967 significantly outyielded KRL 210 only at soil pH ≤ 8.2 and RSC_iw ≤ 2.5 me L⁻¹. By comparisons, substantial improvements in salt tolerance potential of KRL 210 with increasing sodicity stress compensated in attaining significantly higher yields as and when soil pH becomes >8.7 and RSC_iw > 4 me L⁻¹. Designing such variety-oriented threshold limits of sodicity tolerance in wheat will help address the challenge to enhance crop resilience, closing the yield gaps and improve rural livelihood under the existing or predicted levels of salt stress.