What is special for the salaried class in the general budget to be presented on 1st February is what is going on in everyone’s mind. Experts expect that Budget 2026 will not suddenly or completely abolish the old personal income tax regime, but the government may take strong steps towards making the new tax regime more attractive. According to a chartered accountant, this signals a slow but clear policy change aimed at getting taxpayers to voluntarily move to the new regime.
Government can encourage new regime
According to NDTV news, the central government’s stance is clear – instead of forcefully abolishing the old regime, attract taxpayers by giving incentives in the new regime. This strategy ensures a gradual transition while avoiding sudden major changes. Possible incentives that could come in the Budget include further increase in standard deduction (especially in the new regime).
Married couples may have the option of optional joint tax filing (joint filing). Limited deductions for some necessary expenses, such as medical expenses, disability care, or other select items, may be restored.
The difference in the current situation is clear
The standard deduction was increased from ₹50,000 to ₹75,000 under the new regime in Budget 2025. This effectively takes the tax-free income limit for the salaried class to ₹12.75 lakh. Experts believe that any additional increase in future will be applicable only in the new regime, which will deepen the gap between the old and new regime. Considering rising inflation and everyday expenses, increase in standard deduction can play an important role in increasing the disposable income of salaried families.
Government figures reveal the success of the strategy
In FY 2023-24, 72% of taxpayers (about 5.27 crore) opted for the new tax regime. It is estimated that this number will increase further in the income tax year 2025-26, as slab rationalization, rebates and other benefits are proving beneficial for the middle class. Still, about 28% of taxpayers (about 2 crore) still remain in the old regime. The main reason for this is HRA, Health Insurance (80D), Home Loan Interest, Education Loan and other deductions, which were available in the old regime.
Overall, the focus in Budget 2026 is likely to be on strengthening the new regime rather than making major upheavals. This change will be an important step towards providing more relief to the salaried class and making the tax system simple and attractive.
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