Budget 2026: Middle-class taxpayers, seniors look for relief on tax slabs, simple tax filing process
For the salaried class, one of the biggest hopes from Budget 2026 is an increase in the basic exemption limit under the old tax regime, along with a higher standard deduction. Taxpayers opting for the new regime, meanwhile, are seeking further rationalisation of slabs, with a strong push to raise the 30 per cent tax bracket to incomes of Rs 30 lakh or more.
- Jan 20, 2026,
- Updated Jan 20, 2026 6:02 PM IST
As the Union Budget 2026–27 approaches, income tax relief has once again emerged as the foremost demand across taxpayer groups, particularly among salaried individuals, senior citizens and middle-income households. Expectations range from changes in tax slabs and rebates to simplified compliance and targeted support for retirees and women taxpayers.
For the salaried class, one of the biggest hopes from Budget 2026 is an increase in the basic exemption limit under the old tax regime, along with a higher standard deduction. Taxpayers opting for the new regime, meanwhile, are seeking further rationalisation of slabs, with a strong push to raise the 30 per cent tax bracket to incomes of Rs 30 lakh or more. There is also growing demand to allow popular deductions—such as Section 80C, Section 80D and home loan interest—even under the lower-rate new regime.
Relief on long-term capital gains (LTCG) tax, especially on equity and mutual fund investments, is another key expectation, as investors look to improve post-tax returns amid volatile markets.
Focus on ease of compliance
Beyond rates and slabs, taxpayers are calling for meaningful improvements in compliance. Simplified income tax return filing, fewer scrutiny notices, faster refunds and more accurate pre-filled ITR data are high on the wish list. As February 1 draws closer, expectations are firmly centred on measures that increase disposable income while reducing administrative friction.
Recap of last year’s changes
In Budget 2025–26, the government introduced significant changes aimed at boosting household consumption and easing the tax burden under the new regime. Individuals earning up to Rs 12 lakh annually were exempted from income tax, and with the Rs 75,000 standard deduction for salaried taxpayers, the effective tax-free threshold rose to Rs 12.75 lakh.
The revised slabs expanded lower tax bands and deferred the onset of higher rates, benefiting salaried employees, professionals and small business owners who opted for the new regime.
What taxpayers want in Budget 2026
A major proposal gaining traction is a revision of the highest tax slab. Currently, the 30 per cent rate applies from ₹24 lakh, but many stakeholders are advocating for this threshold to be raised to ₹40–50 lakh. Supporters argue that such a move would reflect inflation realities, enhance fairness and allow households to retain more disposable income for savings and consumption.
Another widely discussed area is Section 87A, with calls to expand the rebate to further reduce tax liability for middle-income earners. Analysts believe that a combination of wider slabs and higher rebates could deliver meaningful relief to families coping with rising living costs.
Senior citizens seek stability, not incentives
Senior citizens, in particular, are hoping for a higher tax-free income limit, better deductions for health insurance premiums and increased exemptions on interest income from bank deposits and small savings schemes. Simplifying tax filing for pensioners remains a key demand.
Akhil Rathi, Head – Financial Advisory at 1 Finance, said: "For senior citizens and retirees, the Union Budget is not about new schemes or big announcements. It is about financial stability and peace of mind. After retirement, income becomes largely fixed, while expenses, especially healthcare, continue to rise. India currently has over 15 crore senior citizens, and this number is expected to cross 23 crores by 2036. As this population grows, Budget expectations from retirees are becoming more important than ever. Most retirees depend on bank deposits and small savings for regular income. Lower tax pressure on interest income and relief from unnecessary TDS are key expectations, as interest for seniors is living income, not surplus income."
He added: "However, the biggest expectation from Union Budget 2026 is healthcare support. Medical inflation in India is estimated at 12–14% annually, far higher than general inflation. Even insured senior citizens face high out-of-pocket expenses for medicines, diagnostics, and hospital care. Higher medical tax deductions and simpler benefits are urgently needed."
Rathi also emphasised the need for clarity in pension taxation.
"Senior citizens also expect clearer and simpler tax rules for pension and retirement income. For many, the pension is the only steady monthly cash flow, and even small tax relief can significantly improve daily comfort."
"At its core, retirees want the Budget to recognise one simple reality: retirement income is for living, not investing. Policies should protect stability and dignity, because after retirement, certainty matters more than returns," he added.
Women taxpayers and broader demands
Women taxpayers are also looking for higher rebates, targeted deductions to encourage workforce participation, and incentives for long-term savings. Across all segments, there is a growing call for rationalising surcharge rates, easing the cess burden and bringing greater clarity to capital gains taxation.
As Budget day approaches, expectations remain high that the government will strike a balance between fiscal prudence and broad-based tax relief.
As the Union Budget 2026–27 approaches, income tax relief has once again emerged as the foremost demand across taxpayer groups, particularly among salaried individuals, senior citizens and middle-income households. Expectations range from changes in tax slabs and rebates to simplified compliance and targeted support for retirees and women taxpayers.
For the salaried class, one of the biggest hopes from Budget 2026 is an increase in the basic exemption limit under the old tax regime, along with a higher standard deduction. Taxpayers opting for the new regime, meanwhile, are seeking further rationalisation of slabs, with a strong push to raise the 30 per cent tax bracket to incomes of Rs 30 lakh or more. There is also growing demand to allow popular deductions—such as Section 80C, Section 80D and home loan interest—even under the lower-rate new regime.
Relief on long-term capital gains (LTCG) tax, especially on equity and mutual fund investments, is another key expectation, as investors look to improve post-tax returns amid volatile markets.
Focus on ease of compliance
Beyond rates and slabs, taxpayers are calling for meaningful improvements in compliance. Simplified income tax return filing, fewer scrutiny notices, faster refunds and more accurate pre-filled ITR data are high on the wish list. As February 1 draws closer, expectations are firmly centred on measures that increase disposable income while reducing administrative friction.
Recap of last year’s changes
In Budget 2025–26, the government introduced significant changes aimed at boosting household consumption and easing the tax burden under the new regime. Individuals earning up to Rs 12 lakh annually were exempted from income tax, and with the Rs 75,000 standard deduction for salaried taxpayers, the effective tax-free threshold rose to Rs 12.75 lakh.
The revised slabs expanded lower tax bands and deferred the onset of higher rates, benefiting salaried employees, professionals and small business owners who opted for the new regime.
What taxpayers want in Budget 2026
A major proposal gaining traction is a revision of the highest tax slab. Currently, the 30 per cent rate applies from ₹24 lakh, but many stakeholders are advocating for this threshold to be raised to ₹40–50 lakh. Supporters argue that such a move would reflect inflation realities, enhance fairness and allow households to retain more disposable income for savings and consumption.
Another widely discussed area is Section 87A, with calls to expand the rebate to further reduce tax liability for middle-income earners. Analysts believe that a combination of wider slabs and higher rebates could deliver meaningful relief to families coping with rising living costs.
Senior citizens seek stability, not incentives
Senior citizens, in particular, are hoping for a higher tax-free income limit, better deductions for health insurance premiums and increased exemptions on interest income from bank deposits and small savings schemes. Simplifying tax filing for pensioners remains a key demand.
Akhil Rathi, Head – Financial Advisory at 1 Finance, said: "For senior citizens and retirees, the Union Budget is not about new schemes or big announcements. It is about financial stability and peace of mind. After retirement, income becomes largely fixed, while expenses, especially healthcare, continue to rise. India currently has over 15 crore senior citizens, and this number is expected to cross 23 crores by 2036. As this population grows, Budget expectations from retirees are becoming more important than ever. Most retirees depend on bank deposits and small savings for regular income. Lower tax pressure on interest income and relief from unnecessary TDS are key expectations, as interest for seniors is living income, not surplus income."
He added: "However, the biggest expectation from Union Budget 2026 is healthcare support. Medical inflation in India is estimated at 12–14% annually, far higher than general inflation. Even insured senior citizens face high out-of-pocket expenses for medicines, diagnostics, and hospital care. Higher medical tax deductions and simpler benefits are urgently needed."
Rathi also emphasised the need for clarity in pension taxation.
"Senior citizens also expect clearer and simpler tax rules for pension and retirement income. For many, the pension is the only steady monthly cash flow, and even small tax relief can significantly improve daily comfort."
"At its core, retirees want the Budget to recognise one simple reality: retirement income is for living, not investing. Policies should protect stability and dignity, because after retirement, certainty matters more than returns," he added.
Women taxpayers and broader demands
Women taxpayers are also looking for higher rebates, targeted deductions to encourage workforce participation, and incentives for long-term savings. Across all segments, there is a growing call for rationalising surcharge rates, easing the cess burden and bringing greater clarity to capital gains taxation.
As Budget day approaches, expectations remain high that the government will strike a balance between fiscal prudence and broad-based tax relief.