Budget 2026 May Raise 30% Tax Slab Limit, Experts Weigh In

As preparations for Union Budget 2026 gather pace, a key question is gaining attention among taxpayers: Will the income threshold for the 30% tax bracket be raised to ₹35 lakh? While there is no official confirmation yet, tax experts and economists say the idea is under serious discussion and reflects growing pressure to reform India’s personal income tax structure.

Currently, under the new tax regime, individuals earning above ₹15 lakh fall into the highest 30% tax bracket. Many professionals argue that this limit has not kept pace with inflation, rising salaries, and the cost of living in urban India. As incomes grow, more middle- and upper-middle-class taxpayers are being pushed into the top bracket, increasing calls for relief.

According to tax analysts, raising the 30% slab threshold to ₹35 lakh could significantly benefit salaried professionals, entrepreneurs, and senior executives. “The existing slabs were designed years ago,” said a senior tax consultant. “With inflation and lifestyle costs rising sharply, the tax structure needs recalibration to reflect economic reality.”

Experts believe the move could also boost disposable income, encouraging higher consumption and savings. Increased spending by high earners often has a ripple effect across sectors such as real estate, automobiles, travel, and consumer goods. From a macroeconomic perspective, this could support growth at a time when global economic conditions remain uncertain.

However, concerns remain about the impact on government revenue. Critics argue that raising the top tax threshold could reduce direct tax collections unless offset by higher compliance or economic expansion. Some economists suggest that any slab revision would likely be paired with measures to widen the tax base and reduce evasion.

Policy watchers note that the government has consistently promoted the new tax regime as simpler and more transparent. Adjusting tax slabs—especially the highest bracket—could make the new regime more attractive, encouraging more taxpayers to shift away from the old system with deductions and exemptions.

There is also political context. Budget 2026 will be closely watched as it follows a period of economic transition marked by inflation control, infrastructure spending, and job creation efforts. Offering income tax relief could help strengthen consumer confidence and signal responsiveness to middle-class concerns.

Still, experts caution against assuming a definitive outcome. “These discussions happen before every budget,” said a former finance ministry official. “The final decision depends on fiscal space, revenue projections, and broader economic priorities.”

For now, taxpayers are advised to treat the ₹35 lakh threshold proposal as speculative rather than guaranteed. Official clarity will only come when the finance minister presents the Budget in Parliament.

Until then, the debate highlights a broader issue: the growing demand for a modern tax system that aligns better with India’s evolving income landscape.