Anticipated Tax Relief for Middle Class in Upcoming 2026 Budget

Budget 2026: Expectations for Middle-Class Tax Relief

New Delhi, January 5, 2026: Finance Minister Nirmala Sitharaman is set to unveil the federal budget for 2026 soon. The previous budget in 2025 provided significant relief to the middle class and salaried employees by raising the basic exemption limit under the new tax regime from ₹3 lakh to ₹4 lakh. Additionally, with the increase in standard deduction, salaried individuals effectively do not pay any income tax on earnings up to ₹12.75 lakh.

Key changes in the new tax regime from the 2025 budget included:

• No tax on income from ₹0 to ₹4 lakh.


• Increased rebate (Section 87A) making income up to ₹12 lakh completely tax-free.


• Inclusion of a standard deduction of ₹75,000 for salaried individuals, resulting in no tax up to ₹12.75 lakh.

This has brought relief to millions of middle-class families and increased their savings. Experts believe that the 2026 budget may also offer further tax relief in the slabs to stimulate consumption and investment, thereby promoting economic growth.

In the previous budget, Finance Minister Nirmala Sitharaman emphasized the government's focus on enhancing the purchasing power of the middle class. All eyes are now on whether the exemption limit will be raised further or if there will be changes in the new slabs.