Union Budget 2026: Top Income Tax Expectations for Salaried Taxpayers
The countdown to February 1, 2026, has entered its final hours. Finance Minister Nirmala Sitharaman is set to present the Union Budget on a Sunday—a historic move that has the salaried class and middle-income households watching with bated breath. After the “big bang” reforms of 2025, which made income up to ₹12.75 lakh effectively tax-free under the new regime, the 2026 roadmap is expected to focus on fine-tuning and inflation adjustments.
Sunday Budget Returns After 27 Years In 2026; Last Held In 1999
This year’s presentation is not just about the numbers; it’s about breaking a 27-year-old pattern. Budget 2026 marks the first time since 1999 that the Union Budget falls on a Sunday. Historically, the last Sunday budget was presented by then-Finance Minister Yashwant Sinha on February 28, 1999.
Interestingly, 1999 was also the year India shifted the budget timing from 5 PM to 11 AM to break away from British-era traditions. In 2026, the tradition of a February 1 presentation (fixed in 2017) happens to coincide with a Sunday. To ensure the financial world stays in sync, both the NSE and BSE have announced a special live trading session this Sunday, allowing investors to react to the FM’s announcements in real-time.
Comparison: Current Tax Slabs vs. Expected Changes
The “New Tax Regime” is now the default and most popular choice for the masses. While 2025 saw massive restructuring, 2026 is expected to provide incremental relief, particularly through the Standard Deduction. Analysts suggest that the government may hike the deduction to ₹1,00,000 to counter the rising cost of living.
| Income Bracket | Current Rate (FY 2025-26) | Expected Change (Budget 2026) |
|---|---|---|
| Up to ₹4 Lakh | NIL | NIL (No Change expected) |
| ₹4 Lakh – ₹8 Lakh | 5% | 5% |
| ₹8 Lakh – ₹12 Lakh | 10% | 10% |
| ₹12 Lakh – ₹16 Lakh | 15% | Potential 10-12% (Requested) |
| ₹16 Lakh – ₹20 Lakh | 20% | 20% |
| Standard Deduction | ₹75,000 | ₹1,00,000 |
| Zero Tax Limit* | ₹12.75 Lakh | ₹13.00 Lakh |
*Includes standard deduction + Section 87A rebate.
Key Demands from the Salaried Class
While the new regime is the star of the show, many taxpayers feel the “Old Regime” has been left in the cold. A few thoda-bahut expectations persist:
- Section 80D Expansion: Taxpayers are hoping the FM allows health insurance deductions even under the New Tax Regime to encourage better medical coverage.
- HRA and Home Loans: Urban renters and homeowners are feeling the pinch of high interest rates. Increasing the Section 24(b) limit for home loan interest is a major “wish list” item.
- 80C Revision: The ₹1.5 lakh limit hasn’t moved for a decade. Experts argue that even a small nudge to ₹2 lakh would boost long-term savings.
“Historically, once a new regime becomes default, the government rarely revisits the old one. Analysts might read this as a subtle nudge for the remaining taxpayers to finally make the switch before the old system is phased out entirely.”
What to Do Now?
Figures may shift once official updates arrive during the speech tomorrow at 11 AM. For now, salaried employees should avoid locking in large investments under the old regime until the FM clarifies its longevity. If you’re planning high-value asset sales, wait for the speech to see if Long-Term Capital Gains (LTCG) rules get further “rationalized.”
Frequently Asked Questions (FAQ)
1. Why is the stock market open on a Sunday this time?
Because the Union Budget is being presented on Sunday, February 1, 2026. The NSE and BSE are holding special sessions (9:15 AM to 3:30 PM) so markets can process the news immediately.
2. Will the Old Tax Regime be removed in Budget 2026?
While there is no official word, the government is clearly prioritizing the New Regime. Many experts believe the Old Regime is in its “sunset phase.”
3. How does the ₹12.75 lakh tax-free limit work?
Currently, for income up to ₹12 lakh, you get a full rebate. Adding the ₹75,000 standard deduction makes the first ₹12.75 lakh of your salary tax-free under the New Regime.
Disclaimer: This report is based on current market expectations and historical trends. Actual tax changes will only be confirmed after the Finance Minister’s speech in Parliament.
Written by: Pravin Kumar – Business Reporter – News Hours18 – https://www.newshours18.com
Would you like me to analyze how these expected changes would impact a specific salary bracket, say ₹15 lakh or ₹20 lakh?
