Budget 2026 Expectations: Will Income Tax Slabs Change Under The Old Regime?

As the Union Budget 2026 is set to be presented in Parliament on February 1, taxpayers across the country are closely watching for possible changes in income tax rules.

While major overhauls may be unlikely, experts believe the government could focus on easing compliance, encouraging spending, and offering selective relief to the middle class.

Budget 2026 is expected to balance revenue needs with public demand for tax savings, especially for salaried individuals.

Focus on Consumption, Savings and Simpler Tax Rules

According to tax experts, the upcoming Budget is likely to prioritise higher household consumption by improving disposable income. Measures such as higher standard deduction, simplified tax structures, and quicker dispute resolution are expected to be in focus.

Clarity on capital gains taxation and long-term investment rules is also being widely expected, as it helps taxpayers make informed financial decisions. Benefits linked to housing loans and insurance deductions could also see some changes to support middle-class families.

Will Income Tax Slabs Change in Budget 2026?

Large changes in income tax slabs under the old tax regime appear unlikely this year. Experts point out that significant slab adjustments were already introduced earlier, and the government may prefer stability.

However, there is a growing demand for tax slabs to be adjusted in line with inflation. As salaries rise to match inflation, many taxpayers move into higher tax brackets without a real increase in purchasing power. This issue has once again brought slab rationalisation into the spotlight.

Standard Deduction May Get a Boost

One of the strongest expectations from Budget 2026 is an increase in the standard deduction. Currently, the deduction stands at Rs 75,000 under the new tax regime.
Experts assume this limit could be raised to help salaried individuals cope with rising living costs.

Other Key Expectations From Budget 2026

Apart from tax slabs and deductions, Budget 2026 may also introduce:
Further simplification of income tax forms
Faster processing of refunds and disputes
Continued availability of the old tax regime
Better clarity on capital gains and depreciation rules
Measures to reduce litigation and decriminalise minor tax offences
These steps could help widen the tax base while making compliance easier for honest taxpayers.

Middle-Class Relief Takes Centre Stage

With rising inflation and household expenses, the middle class is hoping Budget 2026 delivers meaningful relief. Experts believe targeted reforms-rather than sweeping changes-could provide immediate financial comfort without straining government finances.

While major slab changes may not happen, even small adjustments in deductions and compliance rules could make a noticeable difference for salaried taxpayers.
As February 1 approaches, all eyes remain on whether Budget 2026 can strike the right balance between fiscal discipline and taxpayer relief.