Budget 2026 Tax Update: New Standard Deduction Hike to ₹1 Lakh? Old vs New Regime Comparison

It’s Saturday, January 24, 2026, and if you’ve been ignoring your tax planning because “Budget Day is still a week away,” it’s time to wake up. We’re officially entering the “Budget 2026” countdown, and the gossip from the finance ministry is all about one thing: the death of the Old Regime is being greatly exaggerated, but its successor is getting all the treats.

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The thing is, the government isn’t ready to pull the plug on the Old Tax Regime yet. But they are making the New Regime so “sweet” that staying with the old one might soon feel like keeping a flip phone in 2026. Or nothing.

Also Read |Tamil Nadu Voter List Purge: 97 Lakh Names Deleted in SIR Phase 1

Budget 2026: Tax Expectations Field Notes

It’s an ongoing situation where the “nudge” is becoming a shove. Here’s the ground reality of what the salaried class is looking at:

• The Standard Deduction Play: Right now, the New Regime gives you a ₹75,000 deduction (up from $₹50,000$ in 2025). The big talk for Budget 2026? A jump to ₹1,00,000 or even ₹1,25,000. The thing is, this would only be for the New Regime. The Old Regime is stuck at $₹50,000$ like it’s frozen in time. Those too.

• The “Magic” Number: If the standard deduction hits $₹1 Lakh$, anyone earning up to ₹13 Lakh could effectively pay zero tax under the new rules. Let’s be real—that’s a massive middle-class bracket that would go completely tax-free.

• Joint Filing? There’s a quiet buzz about “optional joint filing” for married couples. It’s an ongoing situation where you could combine incomes to stay in a lower slab. Messy to implement, but a huge win if it happens.

• The 28% Holdouts: About 2 crore people (including probably you, if you have a big home loan or high HRA) are still clinging to the Old Regime. The government knows they can’t scrap it without a riot. So, they might selectively bring “essential” deductions—like Section 80D (Health Insurance)—into the New Regime to win you over. And here’s the kicker—if they do that, the Old Regime becomes basically useless.

Also Read |Tamil Nadu Voter List Purge: 97 Lakh Names Deleted in SIR Phase 1

New vs. Old Tax Regime: 2026 Forecast

And Here’s the Kicker…

The thing is, the Income Tax Act 2025 officially replaces the 1961 law on April 1, 2026. This Budget is the bridge. It’s an ongoing situation where the government wants to move from “taxing for surviving” to “taxing for thriving.” Or nothing.

One side comment—experts like CA Dr. Suresh Surana are saying the focus is now on “disposable income.” With inflation still biting, the government knows the only way to keep the economy moving is to put actual cash back in your pocket. Those too.

Also Read |Tamil Nadu Voter List Purge: 97 Lakh Names Deleted in SIR Phase 1

End…

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