Union Budget 2026: 4 Tax Changes That Could Put More Money In Your Pocket

Considering the significant tax measures already implemented this fiscal year, considerable tax relief seems unlikely as the Union Budget 2026 draws near. As the 2026 Union Budget approaches, companies and households are concentrating on developing a fairer, straightforward, and predictable direct tax system, which many think would increase household savings and spending.

As the Union Budget 2026 approaches, expectations are building around meaningful personal tax reforms aimed at easing financial pressure on individuals across income groups. Taxpayers are searching for ways to boost their personal income and long-term financial stability in light of growing living expenditures, higher EMIs, market volatility, and rising healthcare costs.

As per Nehal Mota, Co-Founder & CEO, Finnovate, here's a closer look at the major income-tax-related expectations from the Union Budget 2026 that could directly benefit taxpayers, if implemented.

1. Increase the standard deduction for salaried employees

The Union Budget 2026 may consider increasing the standard deduction for salaried employees to Rs 1 lakh. Currently, it is Rs 50,000 under the old tax regime and Rs 75,000 under the new tax regime. A higher standard deduction would help salaried taxpayers manage rising living costs.

2. Housing loan interest in the new tax regime (Section 202 of the Income-tax Act, 2025, corresponding to Section 115BAC of the Income-tax Act, 1961)

Under the current new tax regime, taxpayers cannot offset housing loan interest against salary income for a self-occupied property. Considering the burden of home loan repayments and the goal of promoting home ownership, it is recommended that the Government allow such interest deduction for self-occupied property under the new tax regime.

3. Investment incentives

It is proposed to raise the long-term capital gains (LTCG) tax exemption limit from Rs 1.25 lakh to Rs 2 lakh at the 12.5% rate. Under the new tax regime, equity-linked savings schemes (ELSS) funds and mutual fund retirement schemes could get a Rs 50,000 deduction. Simplified tax treatment for hybrid funds is also suggested. (Note: these are proposals and not yet official budget changes.)

4. Relief for senior citizens

Interest income: The threshold for TDS on interest income under Section 194A for senior citizens could be raised from Rs 1 lakh to Rs 1.5 lakh to reduce unnecessary tax deductions and ease cash flow.

Health insurance: With high medical inflation, an increase in Section 80D limits for the old regime or a new health-related deduction under the new regime is recommended to provide meaningful relief.

Disclaimer: The views and recommendations expressed are solely those of the individual analysts or entities and do not reflect the views of Goodreturns.in or Greynium Information Technologies Private Limited (together referred to as "we"). We do not guarantee, endorse or take responsibility for the accuracy, completeness or reliability of any content, nor do we provide any investment advice or solicit the purchase or sale of securities. All information is provided for informational and educational purposes only and should be independently verified from licensed financial advisors before making any investment decisions.