Budget 2026 Income Tax Expectations: All Eyes on Finance Minister Nirmala Sitharaman
Finance Minister Nirmala Sitharaman is poised to present her ninth consecutive Union Budget tomorrow, with the entire nation eagerly anticipating potential benefits. Following significant tax relief measures in the previous budget, the middle class and salaried individuals across India are particularly hopeful for further income tax reductions in Budget 2026.
Recap of Budget 2025: A Major Boost for Taxpayers
In the Union Budget 2025, Finance Minister Sitharaman delivered a substantial benefit to Indian taxpayers by reducing income tax on earnings up to ₹12 lakh annually. For salaried taxpayers, this effectively increased to ₹12.75 lakh after accounting for the standard deduction of ₹75,000. This move provided considerable relief to millions of middle-class households, making a significant portion of their income tax-free.
Income tax has consistently been a central focus of budget discussions for decades, with the middle class and salaried professionals regularly expecting measures to alleviate their tax burden. With just one day remaining until India Budget 2026 on February 1, expectations are running high among experts and taxpayers alike.
Budget Expectations for Salaried Employees in 2026
Salaried taxpayers are primarily looking for an increase in the standard deduction in Union Budget 2026. Currently set at ₹75,000 under the new tax regime, there is strong anticipation that this amount will be raised to ₹1 lakh. Such an increase would render income up to ₹13 lakh completely tax-free, providing substantial financial relief.
Additionally, taxpayers are expecting rationalization in TDS (Tax Deducted at Source) procedures, which could simplify compliance and improve cash flow management for individuals and businesses.
Current Income Tax Slab Rates for FY 2025-26
Old Tax Regime:
- Income up to ₹2,50,000 – Nil
- ₹2,50,001 to ₹5,00,000 – 5%
- ₹5,00,001 to ₹10,00,000 – 20%
- Income above ₹10,00,000 – 30%
New Tax Regime:
- Income up to ₹3,00,000 – Nil
- ₹3,00,001 to ₹6,00,000 – 5%
- ₹6,00,001 to ₹9,00,000 – 10%
- ₹9,00,001 to ₹12,00,000 – 15%
- ₹12,00,001 to ₹15,00,000 – 20%
- Income above ₹15,00,000 – 30%
Comparing Old vs New Tax Regimes
The fundamental distinction between the old and new tax regimes lies in their respective tax slab structures. While the old regime features fewer slabs, the new regime divides income into more categories, potentially reducing the tax burden for many individuals.
However, the old tax regime offers greater benefits in terms of available deductions. Taxpayers under this regime can claim various exemptions, whereas the new regime permits only limited deductions, such as those for NPS (National Pension System) investments.
Key Income Tax Changes Introduced in Budget 2025
Last year's budget brought significant changes, including the introduction of the New Income Tax Act, 2025, scheduled to take effect from April 1. This legislation represents a comprehensive overhaul of India's tax framework, aiming to simplify processes and enhance compliance.
What to Anticipate in Budget 2026?
According to financial experts, the government is unlikely to implement major revisions to income tax slabs in Union Budget 2026. Nevertheless, expectations remain elevated regarding potential adjustments to TDS mechanisms and standard deduction limits.
Beyond personal taxation, various sectors have their own budget expectations, ranging from infrastructure development to healthcare initiatives, all of which will be closely monitored during the finance minister's address.
Calculating Income Tax for FY 2025-26 (AY 2026-27)
Taxpayers can utilize online income tax calculators to estimate their tax liability for the current financial year. These tools help individuals plan their finances effectively by providing accurate projections based on applicable slab rates and deductions.
As the nation awaits Finance Minister Nirmala Sitharaman's budget presentation, all stakeholders will be analyzing the proposals for their potential impact on household finances and economic growth.
