Budget 2026 Special: Will the Common Man Get Relief in Income Tax?

As the cost of living continues to rise, the salaried class is looking toward the Union Budget 2026 for a “inflation-beating” boost to their take-home pay. With the Income Tax Act, 2025, set to roll out on April 1, 2026, this budget serves as a critical bridge to a simpler tax era.

Here are the Top 5 Expectations that could redefine your finances this year.

1. Hike in Standard Deduction (From ₹75,000 to ₹1 Lakh)

This is the most widespread expectation. To help salaried employees cope with rising urban costs (rent, fuel, and education), experts suggest the standard deduction should be increased.

• The Impact: If raised to ₹1,00,000, it would effectively make income up to ₹13 lakh tax-free for salaried individuals under the New Tax Regime.

2. Expansion of the 30% Tax Slab

Currently, the peak tax rate of 30% kicks in at ₹24 lakh (New Regime). Many argue that this threshold doesn’t reflect the growing national income.

• The Expectation: There is a strong call to move the 30% slab to income above ₹30 lakh. This would provide significant breathing room for upper-middle-class professionals.

3. Enhanced Home Loan Interest Relief (Section 24b)

With real estate prices and interest rates remaining elevated, the “Housing for All” mission needs a tax push.

• The Expectation: Taxpayers are hoping for the interest deduction limit on self-occupied property to be raised from ₹2 lakh to ₹5 lakh. There is also a demand to bring this benefit into the New Tax Regime to make homeownership more attractive.

4. Higher LTCG Exemption (From ₹1.25 Lakh to ₹2 Lakh)

To encourage the “Financialization of Savings” and keep the retail investor interested in the stock market, a tweak in capital gains is expected.

• The Expectation: Investors want the tax-free limit for Long-Term Capital Gains (LTCG) to be increased to ₹2 lakh. This would allow small investors to book more profits without worrying about a tax bite.

5. Health Insurance Relief (Section 80D)

Medical inflation in India is currently running at 11–14%.

• The Expectation: There is a demand to increase the Section 80D deduction for health insurance premiums. More importantly, experts are urging the government to allow this deduction under the New Tax Regime, as health security should be a priority regardless of the tax system chosen.

Budget 2026: Expected Slabs vs. Current Slabs

Conclusion

While a “mega-surprise” like last year is unlikely, Budget 2026 is expected to be a “Consolidation Budget” with a heart for consumption. By putting more disposable income in the hands of the middle class through these 5 targeted reliefs, the government can ensure that India’s growth story remains driven by domestic demand.

Which of these five changes would help your household budget the most? Tell us in the comments!