Budget 2026 is expected to bring significant changes to the tax landscape, with one of the most anticipated proposals being the introduction of joint tax filing for married couples. This move has the potential to reshape how households manage their finances and could offer substantial benefits, particularly for single-income families.
Currently, the Income-tax Act allows individual taxpayers to choose between the default regime under Section 115BAC and the old tax regime. Under both, the basic exemption limit is ₹2.5 lakh in the old regime and ₹4 lakh from FY 2025–26 onwards in the default regime, without considering marital status. This means that while households with multiple earning members can fully utilize these thresholds independently, single-income families often face a mismatch between individual-based exemptions and actual household expenses.
The proposed joint taxation system aims to address this inequity by allowing married couples to file a consolidated return. This framework could introduce a higher, family-level basic exemption limit, effectively combining individual thresholds and providing proportionate relief to single-income households. Under such a system, certain personal reliefs, including the standard deduction under Section 16(ia), could continue to apply on a spouse-specific basis for salaried taxpayers, even with a combined return.
Several benefits are expected to arise from implementing joint taxation. Firstly, it would rationalize the tax burden on families where income accrues mainly to one spouse. Secondly, it would promote equity among households in similar financial situations. Lastly, it could improve administrative efficiency.
The introduction of a joint taxation scheme aligns with the broader trend of tax reforms aimed at simplifying the tax system and easing compliance. The restructuring of India's personal income-tax framework in 2025 has already made net total income up to ₹12 lakh effectively non-taxable, moving a substantial segment of middle-income taxpayers outside the tax net. Future tax policies are likely to shift towards deeper structural reforms that acknowledge the household as a distinct economic unit, with joint taxation being a key step in this direction.
For the tax year 2026, the standard deduction has increased to ₹32,200 for married couples filing jointly. For single taxpayers and married individuals filing separately, the standard deduction rises to ₹16,100, and for heads of households, it will be ₹24,150. The marginal tax rates for 2026 are as follows: 10% for income up to ₹12,400 (single) or ₹24,800 (married filing jointly); 12% for income over ₹12,400 (single) or ₹24,800 (married filing jointly); 22% for income over ₹50,400 (single) or ₹100,800 (married filing jointly); 24% for income over ₹105,700 (single) or ₹211,400 (married filing jointly); 32% for income over ₹201,775 (single) or ₹403,550 (married filing jointly); 35% for income over ₹256,225 (single) or ₹512,450 (married filing jointly); and 37% for income over ₹640,600 (single) or ₹768,700 (married filing jointly).
In addition to joint taxation, Budget 2026 is expected to address other key areas such as direct tax, interest deduction under Section 24(b), foreign tax credit at the TDS deduction stage, ESOP taxation for relocated employees, increased depreciation benefits for manufacturing industries, and tax benefits for artificial intelligence and robotic technology. These measures collectively aim to promote economic growth, reduce the compliance burden, and provide targeted relief to various sectors and taxpayer groups.
