Budget 2026: Income Tax Expectations for the Middle Class

As India approaches Budget 2026, the focus is on the expectations surrounding income tax, especially from the salaried middle class. Finance Minister Nirmala Sitharaman is set to present the Union Budget on February 1, and taxpayers are hoping for further relief after the significant changes introduced in Budget 2025. This previous budget had a major impact, reducing income tax for many, especially those earning up to ₹12 lakh.

Currently, the standard deduction stands at ₹75,000 under the new tax regime. Many salaried employees are advocating for an increase in this limit, hoping to ease their tax burden further. The expectation is that the government will consider these demands, although experts suggest that drastic changes to tax slabs are unlikely this time around.

The difference between the old and new tax regimes continues to be a key talking point. While the old regime offers more deductions, the new regime provides lower tax rates for many. Taxpayers are particularly focused on TDS (Tax Deducted at Source) rationalisation, hoping for improvements in this area as well.

Last year's Budget 2025 had already provided significant relief by raising the non-taxable income limit under the new regime to ₹12.75 lakh post-standard deduction. This change benefitted millions of middle-class taxpayers, making them optimistic about the upcoming budget.

As the budget date draws near, various political leaders and financial experts are weighing in on what they expect. Congress leader K. Suresh emphasized the importance of addressing pressing issues in the budget session, highlighting the need for a budget that caters to the needs of the common people.

Experts like Pyush Lohia suggest that maintaining policy stability and fostering consumer confidence should be the primary focus in the upcoming budget. Continued rationalisation of personal income tax is expected to enhance the disposable income of the middle class, thereby boosting economic growth.

With just days left until the budget announcement, taxpayers remain hopeful that the government will take their needs into account. The anticipation surrounding Budget 2026 is palpable, and many are eagerly awaiting the Finance Minister’s proposals.

Stay tuned for live updates on the Union Budget 2026, as we bring you the latest news and insights leading up to this critical financial event.