Budget 2026: Will Salaried Employees Get a Higher Standard Deduction?

As Budget 2026 approaches, salaried employees across India are closely watching one key announcement that could directly impact their take-home income — a possible increase in the standard deduction.

With rising inflation, higher living costs, and limited tax-saving avenues under the new tax regime, tax experts believe that revising the standard deduction could offer meaningful relief to middle-class taxpayers.

What Is Standard Deduction?

Standard deduction is a flat amount deducted from a salaried individual’s gross income before calculating taxable income. It is available to both salaried employees and pensioners and does not require any bills, investments, or supporting documents.

  • Under the new tax regime, the standard deduction is ₹75,000
  • Under the old tax regime, the deduction stands at ₹50,000

This deduction plays a crucial role in reducing overall tax liability in a simple and compliance-friendly manner.

Why Is an Increase Being Demanded?

Tax professionals and industry bodies are calling for a higher standard deduction in Budget 2026 for several reasons.

  • Relief against rising household expenses and inflation
  • Improved disposable income for salaried individuals
  • Encouragement of spending to support economic growth
  • Simpler tax filing with reduced reliance on exemptions

Proposed Standard Deduction Levels

  • ₹1 lakh standard deduction suggested by KPMG and CA Mohammed S Chokhawala
  • ₹1.5 lakh standard deduction proposed by the American Chambers of Commerce in India (AMCHAM)

These proposals aim to align tax relief with current economic realities faced by salaried taxpayers.

Potential Benefits for Salaried Employees

  • Lower taxable income and reduced tax outgo
  • Higher monthly take-home salary
  • Better financial stability for middle-class households
  • Simplified tax compliance without additional paperwork

Conclusion

A higher standard deduction in Budget 2026 could be one of the most impactful tax relief measures for salaried employees. While no formal announcement has been made yet, growing consensus among tax experts and industry bodies suggests that this demand is gaining momentum.

All eyes will now be on the Union Budget to see whether the government delivers relief to millions of salaried taxpayers.

For the latest Budget 2026 updates, analysis, and tax-related insights, stay tuned to our website myitronline.com.