As India approaches the Union Budget 2026, salaried taxpayers are bracing for possible updates to personal income tax rules that could offer further relief and clarity. The backdrop to these expectations is the substantial revision introduced in last year’s Budget, which reshaped the personal tax landscape under the new income tax regime.

Key Highlights

• Budget 2026 may further simplify income tax rules and extend relief for salaried taxpayers.
• Higher rebates and standard deductions continue to boost middle-class disposable income.

Under the revamped structure, individuals with annual income up to ₹12 lakh pay no income tax, and for salaried taxpayers, the inclusion of a ₹75,000 standard deduction effectively raises this tax-free threshold to ₹12.75 lakh.

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These changes, enacted from April 1, 2025, simplified tax slabs and expanded the rebate under Section 87A, significantly easing the tax burden on the middle class and boosting disposable income. Many taxpayers are reassessing whether to adopt the new regime, which offers lower rates but fewer deductions, over the traditional old regime that still retains exemptions and deductions such as those for housing loan interest and investments.

With Budget 2026 deliberations underway, there is speculation that policymakers may further enhance the attractiveness of the new tax regime, potentially making it the more dominant choice for individual taxpayers. Experts anticipate continued emphasis on simplification, higher rebate limits, and measures designed to encourage compliance and support salaried individuals in navigating their tax liabilities more efficiently.