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As the government prepares the groundwork for Budget 2026, one idea gaining renewed attention is the possibility of joint taxation for married couples. This system allows spouses to combine incomes and be taxed as a single unit.

India currently follows an individual-based taxation framework, under which each taxpayer is assessed separately, irrespective of marital status. While this model simplifies administration, it has long been criticised for overlooking household income dynamics, particularly in families with a single earning member.

How The Current System Works? 

Currently, married individuals are taxed separately under the new tax regime, which has become the default system following successive budget reforms. Income slabs, deductions, and rebates apply on a per-person basis, with limited scope for income sharing except through specific exemptions or asset ownership structures.

As a result, a household with one earning member often faces a higher effective tax burden compared to a dual-income household with the same total income split between two earners.

What Joint Taxation Would Change? 

Under a joint taxation system, the combined income of spouses would be assessed together, either by:

• Splitting total income equally between spouses for tax calculation, or
• Applying a higher basic exemption limit and wider slabs at the household level

For example, a household earning ₹20 lakh annually through a single earner could potentially be taxed more favourably if income is split across two individuals or assessed under a broader joint slab.

“By making this option voluntary, the system preserves taxpayer choice while providing opportunities for considerable relief to those who stand to benefit most,” says Advocate Shreya Sharma, Founder & CEO, Rest The Case, adding, “From a broader policy perspective, joint taxation could lead to fairer tax outcomes and strengthen middle-class disposable income, while also encouraging savings, investment and consumption. If implemented with robust safeguards and clear compliance norms, this reform would be a meaningful step toward a more equitable and progressive tax framework in India.”

Several countries, including the United States (optional), Germany, and France, offer some form of joint or family-based taxation, often to support households with dependent spouses or children.

Why The Idea Is Gaining Traction Now? 

First, the new tax regime’s limited deductions have reduced avenues for tax planning, increasing pressure on middle-income households.

Secondly, data from income tax filings show a rise in single-income urban households, particularly where one spouse exits the workforce due to caregiving responsibilities.

Third, the government has repeatedly stated its intent to make taxation more equitable and consumption-supportive, especially amid uneven income growth.

Joint taxation is being viewed as one possible tool to address these concerns without raising exemption thresholds across the board.