As preparations for Union Budget 2026 gain momentum, a major policy proposal is generating buzz among India’s married taxpayers. The government is reportedly considering a shift that could significantly ease the income tax burden on couples—an optional joint taxation system for husband and wife. If implemented, this reform could help families save more and simplify tax compliance.

Why Married Taxpayers Are Hoping for Relief

Under the current income tax framework, husbands and wives are treated as separate taxpayers, even if the household largely depends on a single income. This often leads to a higher tax outgo, especially for middle-class families, as the basic exemption limits and slabs do not adequately account for shared household responsibilities.

At present, the basic exemption limit stands at ₹2.5 lakh under the old tax regime and ₹4 lakh under the new regime. Many families feel these thresholds are insufficient, forcing them to explore income-splitting or transfers within the family to reduce tax liability—an approach that adds complexity and compliance risks.

What Is the Joint Taxation Proposal?

The Institute of Chartered Accountants of India (ICAI) has submitted a recommendation to the government suggesting an optional joint taxation system for married couples. Under this system:

• Husband and wife would be allowed to combine their incomes and file a single income tax return.

• Both individuals must possess valid PAN cards.

• The system would offer double the basic exemption limit along with new, family-friendly tax slabs.

The objective is to make the tax structure more equitable for households where income and expenses are shared.

Proposed Joint Taxation Slabs (Illustrative)

According to ICAI’s proposal, the following tax slabs could apply to combined annual income:

• Up to ₹8,00,000: Nil

• ₹8,00,001 to ₹16,00,000: 5%

• ₹16,00,001 to ₹24,00,000: 10%

• ₹24,00,001 to ₹32,00,000: 15%

• ₹32,00,001 to ₹40,00,000: 20%

• ₹40,00,001 to ₹48,00,000: 25%

• Above ₹48,00,000: 30%

If adopted, these slabs could provide substantial relief to middle-income families, especially dual-income couples.

Surcharge Relief Also on the Table

Beyond slabs, ICAI has also suggested revising surcharge thresholds:

• For single earners, the surcharge trigger could rise from ₹50 lakh to ₹75 lakh.

• For couples opting for joint taxation, the surcharge threshold could extend up to ₹1.5 crore.

This move would reduce the tax burden on higher-income families and make the system more progressive.

Not a New Idea, But Renewed Hope

The concept of joint taxation is not new. ICAI had made a similar recommendation ahead of Budget 2025, but it did not find its way into policy then. With Budget 2026 approaching, expectations are high that the government may revisit the proposal.

All eyes are now on Nirmala Sitharaman, who is scheduled to present the Union Budget on 1 February 2026. Married taxpayers are keen to see whether this long-standing demand will finally be addressed.

How Much Could Couples Save?

To understand the potential impact, consider this example:

• If both husband and wife earn ₹16 lakh each, they currently pay tax separately—around ₹1.24 lakh each, totaling ₹2.48 lakh.

• Under the proposed joint taxation system, if their combined income is considered (₹30 lakh), the estimated tax liability could be around ₹2.10 lakh.

This translates to a potential saving of approximately ₹38,000, excluding rebates.

What Happens Next?

While the proposal is still under consideration, it reflects a broader shift toward a family-centric tax framework. If approved, joint taxation could simplify filings, reduce tax stress, and offer meaningful savings to millions of married households.

For now, taxpayers will have to wait until Budget Day to see whether this much-anticipated reform becomes a reality.