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It is no surprise that Union Budget 2026 arrives at a critical juncture for the Indian economy, positioned between the major structural reforms of 2025 and the full implementation of the Income Tax Act, 2025, scheduled for April 1, 2026.

To borrow from PB Shelley, the budget is often the 'destroyer' or 'preserver' of dreams for the common man, depending on how "sweet" or "sour" the final numbers turn out to be. For the salaried class and retail investors, expectations are high for a "fine-tuning" of the existing framework to combat persistent inflationary pressures and the rising cost of living.

"The primary objective of the 2026 personal finance tweaks is to provide immediate liquidity to the middle-income group without a fundamental overhaul of tax slabs," Punit Mota, proprietor, Punit Mota & Co Chartered Accountant told The Free Press Journal.

Standard deduction hike: There is significant consensus among tax experts (including firms like KPMG) that the standard deduction should be increased from Rs75,000 to Rs1,00,000 (or potentially up to Rs1,50,000). This move is intended to directly offset the 2025-26 inflation cycle. Whether that happens of not is totally dependent on the Union Finance Minister Nirmala Sitharaman.

30% tax slab realignment: Currently, the highest tax rate of 30% under the new tax regime is applicable to income above Rs24 lakh. Industry bodies have recommended pushing this threshold to Rs30 lakh to better reflect current salary growth trends and prevent "bracket creep" where inflation pushes taxpayers into higher brackets despite no real increase in purchasing power.

Health insurance (Section 80D): While the new regime currently excludes 80D deductions, there is a strong demand to introduce a limited deduction for health insurance premiums. Given that medical inflation has outpaced general CPI, increasing the existing limit from Rs25,000 to Rs50,000 for individuals, and up to Rs1,00,000 for senior citizens, is viewed as a necessary social security measure.

According to Mota, the 2026 personal finance vibe emphasises on long-term fiscal discipline through mindful savings.

NPS expansion: To strengthen the national social security net, expectations include increasing the additional deduction for National Pension System (NPS) contributions from Rs50,000 to Rs1,00,000. Furthermore, experts anticipate this deduction may finally be extended to the new tax regime to encourage retirement planning regardless of the chosen regime.

LTCG rationalisation: The Association of Mutual Funds in India (AMFI) has proposed raising the Long-Term Capital Gains (LTCG) tax exemption limit from Rs1.25 lakh to Rs2 lakh. This aims to protect the gains of small retail investors who have increasingly entered the equity markets over the last three years.

Sovereign Gold Bonds (SGB): Mota said that after a hiatus in new tranches during 2025, there is hope for a revival. However, government signals suggest a potential shift toward discontinuing new issues to manage interest liabilities making the 2026 announcement a "make-or-break" moment for this asset class.

There is no doubt that high property prices and sustained high interest rates have slowed the affordable housing segment.

Section 24(b) enhancement: For those staying in the old regime, the Rs2 lakh interest deduction on home loans is considered outdated. Proposals suggest doubling this to Rs4 lakh or Rs5 lakh to match current EMI burdens.

First-time homebuyers: Specific subsidies or interest subvention schemes are expected to be reintroduced for the "entry-level" market to stimulate demand in the construction sector.