The countdown to Budget 2026 has begun, with Finance Minister Nirmala Sitharaman set to present the Union Budget in less than two weeks. This year’s budget presentation is noteworthy for another reason as well — it will be presented on a Sunday, prompting a rare decision to keep the stock markets open on Budget Day.

Beyond market logistics, however, the real focus is on taxpayers. After the sweeping income tax relief announced last year, salaried individuals and the middle class are once again hoping for measures that ease their tax burden further.

What taxpayers gained in Budget 2025
In Budget 2025, the government delivered one of the most significant overhauls of personal taxation in recent years. The most impactful announcement was making income up to ₹12 lakh tax-free under the new tax regime. For salaried individuals, this limit effectively rose to ₹12.75 lakh after accounting for the standard deduction of ₹75,000.

The revised income tax slabs under the new regime were also introduced to simplify taxation and boost consumption. These slabs reduced tax liability for a large section of the middle class and were widely welcomed.

Key slab structure under the new regime
Income up to ₹4 lakh was made tax-free, followed by progressive rates ranging from 5 percent to 30 percent for higher income brackets, with the top rate applicable on income above ₹24 lakh.

Major structural tax reforms last year
Apart from slab changes, Sitharaman also announced the new Income Tax Bill, 2025, which was later passed in Parliament. The new law, scheduled to come into effect from April 1, simplifies language, removes outdated provisions and restructures sections to improve clarity and compliance.

Other relief measures included changes to Tax Deducted at Source (TDS). The TDS threshold on rent was raised from ₹2.4 lakh to ₹6 lakh, offering relief to small landlords. For senior citizens, the TDS exemption limit on interest income was doubled from ₹50,000 to ₹1 lakh.

Additionally, the time window to file updated income tax returns through ITR(U) was extended from two years to four years, allowing taxpayers greater flexibility to correct past filings.

Focus shifts to standard deduction in Budget 2026
As Budget 2026 approaches, taxpayers are now closely watching whether the government will revise the standard deduction limit. Currently set at ₹75,000, there is growing demand to increase it to ₹1 lakh.

If this change is implemented, salaried individuals could enjoy tax-free income of up to ₹13 lakh under the new tax regime, offering meaningful relief amid rising living costs. This demand was raised last year as well but was not addressed at the time.

What experts expect this year
Tax experts caution that major direct tax changes may be unlikely in Budget 2026, given the extensive reforms already announced last year. Richa Sahni, Partner in the Tax Department at Grant Thornton India, told Mint that the government may prefer to assess the impact of last year’s slab revisions on tax collections before making further changes.

However, she noted that in the long term, annual adjustments to tax slabs to account for inflation and cost-of-living increases could make the new tax regime more attractive and equitable.

Meanwhile, Nishant Shah, Partner at Economic Laws Practice, told Livemint that Budget 2026 is expected to focus on smooth implementation of the Income Tax Act, 2025. He added that the government may consider measures to provide greater tax certainty for foreign investors, including potential exemptions for sovereign wealth funds and long-term capital investors in listed Indian equities. Such steps are aimed at reversing recent foreign portfolio investment outflows and attracting stable, long-term capital.

Will the standard deduction be raised?
While large-scale tax reforms may be off the table this year, a revision in the standard deduction remains one of the few realistic relief measures on the table. An increase to ₹1 lakh would directly benefit salaried taxpayers without significantly disrupting tax collections, making it a politically and fiscally viable option.

Whether the Finance Minister opens her budget box to deliver this relief will be known on Budget Day. Until then, taxpayers remain hopeful that some breathing room will be offered once again.