The Budget 2026 tax changes are expected to affect the tax payments of Indians and their savings plans.
With the cost of living on the rise, higher EMIs, and income pressures, there are high expectations for the Union Budget 2026—particularly from salaried employees, freelancers, and small business owners.
This guide discusses the anticipated tax changes in Budget 2026 and how the new tax regime versus the old one in FY 2026–27 may influence your take-home pay and tax planning.
Budget 2026 Expectations on Income Tax
The government is consistently promoting the new tax approach for its simplicity, and the tax changes in Budget 2026 are expected to enhance this transition—while offering targeted help to the middle class.
As inflation and EMIs are squeezing disposable income, taxpayers are looking for meaningful changes instead of just surface-level adjustments.
Key income tax expectations in Budget 2026
- Potential changes in income tax brackets with the new tax system
- Increased standard deduction for wage earners
- More straightforward deductions and exemptions
- Targeted support for middle-income earners, particularly in the ₹7–15 lakh range
Although no formal statements have been issued yet, the trend suggests reduced tax rates with fewer exemptions, enhancing the appeal of the new tax system for FY 2026–27.
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New vs Old Tax Regime: What Could Change in 2026?
As the tax changes for Budget 2026 are coming, taxpayers are paying attention to see if the new tax system will offer more relief or if the old system will keep benefiting savings and investments.
New Tax Regime
The new structure could be more enticing due to lower rates and simplified regulations.
- Proposed changes:
- Larger standard deduction (currently ₹50,000)
- Expanded tax brackets
- Continued rebates for lower-income groups
Best suited for: Salaried individuals with minimal investments, young professionals, and freelancers.
Old Tax Regime
The old system can keep using existing deductions.
- 80C (₹1.5 lakh), 80D, HRA, LTA
- Home loan interest benefits
Best for: Home loan borrowers and taxpayers utilizing several deductions.
If the 2026 budget tax reforms target lower rates, the new system may appeal to more taxpayers. Yet, those with strong investments might still find the old system beneficial.
Budget 2026 Tax Slab Expectations
The final details will be confirmed on Budget Day, but tax changes in Budget 2026 are anticipated to provide relief by modifying income tax slabs in the new framework.
Key expectations include:
- An increased no-tax income threshold in the new tax framework
- Continued tax-free income up to ₹7 lakh (through rebate)
- Rationalization of higher slabs to lessen the tax burden
If these changes take place, they could directly respond to common inquiries like “Is income up to ₹7 lakh tax-free in 2026?” and “Have tax slabs changed for FY 2026–27?”
Once the Union Budget 2026 is announced, we will have final clarity.
Salaried vs Self-Employed: Budget 2026 Impact Analysis
Changes to taxes in the 2026 budget will probably affect salaried employees and self-employed people differently, depending on their earnings and tax obligations.
For Salaried Employees
Key expectations include:
- Higher standard deduction
- Simplified tax filing process
- Lower compliance requirements
This could improve take-home income, especially for those earning ₹7–15 lakh annually.
For Self-Employed & Freelancers
Possible adjustments may consist of:
- Easier presumptive taxation limits
- Clearer regulations on GST and income tax overlap
- Improved digital compliance assistance
However, the limited deductions in the new tax regime might still be an issue.
If Budget 2026 prioritizes simplicity and lower rates, salaried taxpayers may gain more. Self-employed professionals could benefit from simpler compliance—but tax efficiency will still depend on deductions and income structure.
Which Tax Regime Is Better for ₹15 Lakh Income in 2025–26?
With an income of ₹15 lakh in FY 2025–26, the better tax system mainly depends on your deductions. If you have few investments, no home loan, and prefer simplicity, the new tax system could provide lower taxes and simpler compliance.
On the other hand, if you regularly claim benefits such as Section 80C, 80D, HRA, and home loan interest, the old tax system might still be more efficient for taxes. The best option changes based on how much you save and invest, not just your income.
Other Budget 2026 Expectations Beyond Tax Slabs
The tax changes proposed in the 2026 budget are likely to be the main highlight, but the Union Budget 2026 will also implement crucial reforms that may indirectly influence Key non-tax expectations for Budget 2026 highlight:
- Banking sector reforms that will enhance credit flow and maintain financial stability.
- Incentives for green energy to encourage clean investments and foster job creation.
- Assistance for MSMEs and startups via funding opportunities and policy relief.
- Digital tax compliance measures designed to minimize errors and streamline reporting.
While these measures may not directly alter tax brackets, they could greatly impact job opportunities, credit access, and overall investment sentiment in FY 2026–27.
Frequently Asked Questions (FAQs) About: Budget 2026 Tax Changes
What is the new tax regime in 2026?
The expectation is that the default arrangement will stay in place, characterized by simplified slabs and a reduction in deductions.
Will tax slabs change in Budget 2026?
Changes are likely, especially with the new leadership, but the final specifics will be disclosed on Budget Day.
Is income up to ₹7 lakh tax free in FY 2026–27?
Likely yes, subject to rebate provisions continuing.
Which tax regime is better for salaried employees?
It depends on deductions. High deductions favour the old regime; simplicity favours the new one.
When is Budget 2026 expected?
Union Budget 2026 is expected to be presented in February 2026.
Final Take on Budget 2026 Tax Expectations
Changes to taxes in the Union Budget 2026 are expected to prioritize ease of understanding, smoother compliance, and targeted assistance for the middle class.
While the new tax regime may become more appealing due to its lower rates and simplified rules, the previous regime will still be important for taxpayers with home loans and long-term investments.
The best course of action is to evaluate both regimes once the official tax slabs are announced and choose the option that results in the lowest tax burden.
Action Tip: Save this guide and turn on push notifications to receive instant updates on Budget Day. Once the budget is released, utilize a tax calculator to determine the most tax-efficient choice for FY 2026–27.
