Over the past few years, the Union Budget has increasingly focused on providing tax relief to individual taxpayers, especially the salaried and middle-income segments. As expectations rise ahead of Budget 2026, taxpayers are once again hoping for meaningful reforms in the income tax structure.

Finance Minister Nirmala Sitharaman made a major announcement in the previous budget by making annual income up to ₹12 lakh tax-free under the new tax regime. This move significantly boosted the popularity of the new regime. Now, all eyes are on what the government may offer taxpayers in Income Tax Budget 2026.

Here are 10 key announcements that experts believe could be part of the upcoming budget.

1️⃣ Possible Changes in Tax Slabs

While the new tax regime saw revisions last year, the old tax regime remained unchanged. In Budget 2026, the government may tweak the old regime tax slabs to offer relief to taxpayers who still prefer deductions and exemptions.

2️⃣ Simplification of TDS Rates

Currently, multiple TDS rates apply to different transactions, making compliance complicated. The government may reduce the number of TDS rates to just 2–3 slabs, simplifying the tax system.

3️⃣ Higher Home Loan Tax Deduction

Under Section 24(b), taxpayers can currently claim a deduction of up to ₹2 lakh on home loan interest. In Budget 2026, this limit could be raised to ₹4 lakh, providing a strong boost to the housing sector.

4️⃣ Joint Taxation for Husband and Wife

India currently follows individual taxation, even for married couples. ICAI has suggested introducing joint taxation, similar to systems in the US and Europe, which could significantly reduce a family’s tax burden.

5️⃣ Increase in LTCG Tax-Free Limit

The government may increase the Long-Term Capital Gains (LTCG) tax-free limit on equities and equity mutual funds from the current ₹1.25 lakh to ₹1.5 lakh or more, encouraging long-term investments.

6️⃣ Insurance Deductions in New Tax Regime

At present, deductions for term insurance and health insurance premiums are available only under the old regime. Budget 2026 may introduce insurance deductions under the new tax regime as well.

7️⃣ Revised Definition of Affordable Housing

Currently, homes priced up to ₹45 lakh qualify as affordable housing. Given rising real estate prices, the government may raise this cap to ₹75 lakh, benefiting homebuyers.

8️⃣ Low-Interest Loans for Electric Vehicles

To promote green mobility, the government may announce low-interest EV loans, making electric vehicles more affordable and reducing urban pollution.

9️⃣ Changes in Debt Fund Taxation

After tax rule changes in Budget 2023, investor interest in debt funds declined. Budget 2026 may revisit debt fund taxation rules to make them more investor-friendly.

🔟 Higher Standard Deduction in Old Regime

The standard deduction under the new regime is ₹75,000, while it remains ₹50,000 under the old regime. Considering inflation, the government may increase the deduction in the old regime as well.

Final Takeaway

Income Tax Budget 2026 is expected to be crucial for taxpayers. If even a few of these proposed measures are announced, it could bring significant relief to salaried individuals, middle-class families, and long-term investors, while also boosting overall economic consumption.