Budget 2026: Joint tax filing for married couples gains traction to ease family tax burden

Budget expectations 2026: The Institute of Chartered Accountants of India (ICAI) has proposed a significant shift in India’s income-tax framework by recommending an optional system of joint taxation for married couples, arguing that the current structure does not adequately reflect the financial realities of Indian households. The suggestion, included in ICAI’s pre-Budget submission to the finance ministry, is aimed at making the tax system more equitable for families that depend on a single earning member or have uneven income distribution between spouses.

At present, India follows a system of individual taxation, under which each taxpayer is assessed separately. Under the New Tax Regime, individuals enjoy a basic exemption limit of Rs 4 lakh, while under the Old Tax regime the threshold stands at Rs 2.5 lakh. ICAI points out that while this works well for dual-income families, it disadvantages single-earner households, where the non-working spouse’s exemption limit remains unused. This often pushes families toward income-shifting strategies within the household, adding complexity and sometimes compliance risks.

Individual tax slabs (New Tax Regime)

Under the revised structure, individuals earning up to ₹12 lakh annually do not have to pay any income tax.

₹0–4 lakh: Nil

₹4–8 lakh: 5%

₹8–12 lakh: 10%

₹12–16 lakh: 15%

₹16–20 lakh: 20%

₹20–24 lakh: 25%

Above ₹24 lakh: 30%

Proposed tax regime

Under the institute’s proposal, married couples choosing joint filing would be assessed on their combined income, with the basic exemption limit effectively doubled to Rs 8 lakh. Tax slabs would be widened to suit household income levels, with ICAI recommending that the highest tax rate of 30 per cent apply only to income above Rs 48 lakh. The model also envisages recalibrated surcharge thresholds and the continuation of separate standard deductions for each salaried spouse, even under joint filing.

Karthik Narayan, Vice President – Title, Tax & Transition at Stellar Innovations, said the idea deserves serious consideration in the 2026 Budget. “The introduction of joint tax filing and reform of Hindu Undivided Family taxation are timely, especially as dual-income families and family-run businesses expand. Today, the tax burden—shared in practice—is largely borne by individual salary earners,” he said. Narayan added that a structured joint-filing framework could recognise household-level expenses more effectively and improve compliance through simpler digital processes.

Revised slabs, tax relief

Several advanced economies, including the US, Germany and Portugal, allow married couples to file joint tax returns, enabling income averaging at the household level. ICAI believes India should consider a similar approach, allowing couples with valid PANs to voluntarily opt for joint taxation while retaining the flexibility to continue under the existing individual system.

ICAI has outlined a possible structure under which married couples could file a single income-tax return, with revised slabs such as nil tax up to ₹6 lakh and a 5 per cent rate between Rs 6 lakh and Rs 14 lakh. The system would remain optional, ensuring taxpayers can choose whichever method—joint or individual—results in lower tax liability.

The institute believes joint taxation could deliver several benefits. Compliance would become simpler with one consolidated return per household. Many families, particularly those with a single earning member, would see a lower effective tax burden. The reform would also align India with global tax practices and recognise the household, rather than just the individual, as an economic unit.

Challenges in execution

However, the proposal also presents challenges. India’s tax infrastructure is deeply rooted in individual PAN-based filing, TDS and TCS systems, which would need significant redesign to accommodate joint assessment. Policymakers would also have to guard against revenue leakage if exemptions and deductions are expanded without adequate safeguards. Clear rules on deductions, rebates and exemptions would be essential to prevent disputes and uneven interpretation.

There is also the question of impact on high-income dual-earner couples. In some cases, joint taxation could push combined income into higher slabs, raising tax liability. This is why ICAI has stressed that the system must remain elective rather than mandatory.

CA Suresh Surana, in an article, noted that an elective joint-taxation system, supported by separate slabs for joint filers, would better reflect a household’s true ability to pay tax. 

Surana proposed the framework could provide full tax exemption on combined income up to Rs 8 lakh. Income between Rs 8 lakh and Rs 16 lakh could attract a tax rate of 5 per cent, followed by 10 per cent on income from Rs 16 lakh to Rs 24 lakh. Higher slabs could then apply progressively, with rates rising to 15 per cent for income between Rs 24 lakh and Rs 32 lakh, 20 per cent for Rs 32 lakh to Rs 40 lakh, and continuing upwards for higher income brackets.

He proposed revised tax slabs as: 

Total Joint Income    Rate of Tax
Up to Rs. 8,00,000    Nil
Rs. 8,00,001 – Rs. 16,00,000    5%
Rs. 16,00,001 – Rs. 24,00,000    10%
Rs. 24,00,001 – Rs. 32,00,000    15%
Rs. 32,00,001 – Rs. 40,00,000    20%
Rs. 40,00,001 – Rs. 48,00,000    25%
Above Rs. 48,00,000    30%

For Indian families, the implications could be substantial. Single-income households stand to benefit the most through lower taxes and simpler filing. Moderate-income dual-earner couples could gain from higher combined exemptions. Families facing large expenses such as education, healthcare and housing loans may find it easier to optimise deductions. High-income couples, however, would need to evaluate carefully before opting in.