Budget 2026: What Salaried & Middle-Class Taxpayers Really Want This Year
As India prepares for the Union Budget 2026, to be presented by Finance Minister Nirmala Sitharaman, many salaried and middle-class households are watching closely with one big question in mind: Will we get meaningful income tax relief?
Though experts say the government doesn’t have much fiscal space to make major tax changes, there’s still hope for tweaks that ease the burden on taxpayers. Here are the top five areas where relief is expected or being asked for:
1. Higher Income Tax Slabs & Bigger Rebate Under Section 87A
Right now, under the new tax regime, income up to ₹4 lakh is tax-free, followed by progressive slabs that go up to 30 % for earnings above ₹24 lakh. Many believe that increasing these basic exemption limits and raising the threshold for the highest tax slab would meaningfully boost take-home pay. There’s also a call to raise the threshold for the Section 87A rebate — helping low- and middle-income taxpayers pay less or no tax.
2. Bigger Standard Deduction for Salaried Employees
Currently, the standard deduction under the old tax regime is ₹50,000 and ₹75,000 under the new regime. With inflation and job-related costs rising, there’s a strong demand to increase this deduction so that salaried workers can keep more of what they earn without having to rely solely on exemptions.
3. Better Treatment for Home Loan Interest
Taxpayers who have home loans get a deduction on interest payments under Section 24(b) only if they are in the old tax regime. Many feel this benefit should be available even if you choose the new tax regime. Moreover, because property prices and interest costs have gone up in recent years, it’s argued that the current ₹2 lakh cap on interest deduction is too low and should be raised.
4. Re-Look at Section 80C Limits
Section 80C lets you reduce taxable income based on certain investments and savings, like PPF, life insurance, ELSS, etc. But the ₹1.5 lakh limit hasn’t moved for years. Salaried and middle-class families want this limit increased so savings and long-term financial planning are more rewarding. There’s even talk of including similar benefits in the new tax regime to make it more attractive.
5. Simpler Tax Filing & Compliance Support
While tax filing systems have improved over time, many taxpayers still struggle with complexities in forms, mismatches in statements, or technical challenges in e-filing. There’s a clear push for a simpler, more transparent process — less paperwork, clearer communication, and better support — so honest taxpayers don’t feel overwhelmed.
Final Thought
Middle-class
India is not just asking for minor tweaks — the demand reflects real financial
concerns triggered by inflation, housing costs, and rising living expenses.
However, given the government’s limited fiscal room, any tax relief in Budget
2026 will likely be incremental but targeted rather than sweeping.
FAQs: Budget 2026 Income Tax Expectations
1. Will
Budget 2026 increase income tax slabs for salaried taxpayers?
There is strong hope that Budget 2026 may revise
income tax slabs, especially under the new tax regime. Salaried and
middle-class taxpayers are expecting higher basic exemption limits and a
possible shift in higher tax slabs to reduce overall tax burden.
2. Is an
increase in standard deduction expected in Budget 2026?
Yes, many taxpayers expect the government to
increase the standard deduction. With rising inflation and daily expenses, the
current deduction limits are seen as inadequate, and an enhancement would
directly improve take-home salary.
3. Will
home loan interest deduction be allowed under the new tax regime?
Currently, home loan interest deduction under
Section 24(b) is available only in the old tax regime. Taxpayers are hoping
Budget 2026 extends this benefit to the new tax regime as well, especially
since housing costs have gone up significantly.
4. Is
the Section 80C limit likely to be increased?
The Section 80C limit of ₹1.5 lakh has
remained unchanged for many years. Middle-class taxpayers expect Budget 2026 to
increase this limit or introduce similar investment benefits under the new tax
regime to encourage savings.