Budget 2026 Live: Income Tax Cuts For Middle Class?
As Finance Minister Nirmala Sitharaman prepares to present the Union Budget 2026 today, February 1, at 11 am in Parliament, one question dominates conversations across offices, dining tables, and social media groups — will income tax slabs be revised, and will the middle class finally see some relief?
For salaried taxpayers, the Budget is not about deficit figures or economic projections. It is about monthly take-home pay, loan EMIs, school expenses, house rent, and whether there is any extra savings left at the end of the month. Even a small tweak in tax slabs, deductions, or rebates can make a noticeable difference to household finances.
Last year, the Finance Minister announced a major relief by exempting income up to ₹12 lakh from tax under the new tax regime. With the standard deduction included, salaried individuals earning up to ₹12.75 lakh effectively paid zero income tax. This move was widely welcomed and set expectations high for Budget 2026.
This year, attention has shifted to the next income bracket — those earning between ₹15 lakh and ₹20 lakh annually. Many taxpayers are keen to know whether the government will extend similar benefits, simplify compliance, or revise slab thresholds to ease the burden on the working middle class.
Focus on What Matters to Taxpayers
Rather than getting lost in technical language, this coverage focuses on the issues that directly affect taxpayers — income tax changes, deductions, rebates, and how much money actually stays in your pocket after the Budget.
Ahead of the Budget presentation, Finance Minister Nirmala Sitharaman, along with her team, was seen carrying the traditional ‘Budget tablet’ as she headed to Parliament. Earlier in the day, she also met President Droupadi Murmu at Rashtrapati Bhavan, following established protocol before presenting her ninth consecutive Budget.
What the Salaried Class Is Hoping For
For most salaried individuals, the expectation is clear: direct tax relief.
One major demand is an increase in the standard deduction under the new tax regime. Currently set at ₹75,000, many taxpayers hope it will be raised to ₹1 lakh, which could make income up to ₹13 lakh effectively tax-free.
There is also growing demand for revisiting the highest tax slab. Taxpayers paying 30% tax want the threshold for this rate to be pushed beyond the current ₹15 lakh limit under the new regime, making it more aligned with rising living costs.
Key Expectations From Budget 2026
Higher standard deduction: Increase from ₹75,000 to ₹1 lakh under the new tax regime
Simpler TDS rules: Rationalisation of TDS provisions to reduce confusion for salaried employees and small taxpayers
Cleaner tax structure: Fewer calculations, fewer exemptions, and easier compliance
Current Income Tax Slabs (FY 2025–26)
Old Tax Regime
- Income up to ₹2.5 lakh – Nil
- ₹2.5 lakh to ₹5 lakh – 5%
- ₹5 lakh to ₹10 lakh – 20%
- Above ₹10 lakh – 30%
New Tax Regime
- Income up to ₹3 lakh – Nil
- ₹3 lakh to ₹6 lakh – 5%
- ₹6 lakh to ₹9 lakh – 10%
- ₹9 lakh to ₹12 lakh – 15%
- ₹12 lakh to ₹15 lakh – 20%
- Above ₹15 lakh – 30%
Old vs New Tax Regime: Which One Works Better?
The new tax regime offers lower rates spread across more slabs, which benefits many taxpayers, especially those with fewer deductions. However, the old tax regime continues to attract individuals who make use of multiple exemptions and deductions such as:
- House Rent Allowance (HRA)
- Section 80C investments
- Home loan interest benefits
Under the new regime, only limited deductions are allowed, including employer contributions to the National Pension System (NPS).
Tax Alert for Agricultural Land Transactions
Taxpayers dealing with agricultural land should also remain cautious. Under existing income tax laws, individuals and Hindu Undivided Families (HUFs) can claim exemption on capital gains from the sale of urban agricultural land — but only if the gains are reinvested in new agricultural land within two years.
The exemption is subject to a cap. Tax relief is limited to the lower of:
- The capital gains earned, or
- The cost of the new agricultural land purchased
For instance, if a taxpayer earns ₹50 lakh in capital gains but reinvests only ₹40 lakh, the exemption will be restricted to ₹40 lakh, and the remaining amount will be taxable.
What to Watch Out For Today
As Budget 2026 unfolds, taxpayers will closely track announcements related to income tax slabs, deductions, rebates, and compliance rules. Any change here has a direct and immediate impact on millions of salaried households across the country.
Stay tuned for clear, real-time updates on every income tax announcement that matters — no jargon, no speculation, just practical takeaways for your wallet.
Also read: Union Budget 2026: Nirmala Sitharaman Presents Ninth Budget Today, Feb 1!
