Union Budget 2026 expectations rise as experts seek higher tax deductions, health insurance relief and simplification of the new tax regime.
Tax professionals are urging the government to expand deductions under the new regime to make it more practical and attractive. (Fike Photo)
As the Union Budget 2026–27 draws closer, expectations are building among salaried individuals, senior citizens, and high-income earners for meaningful changes in the new tax regime. With rising living costs, medical inflation, and housing expenses squeezing household budgets, tax experts believe the government has an opportunity to fine-tune the system to offer real relief without complicating compliance.
The new tax regime is now the default option for taxpayers, but many argue it still lacks key deductions that matter most to Indian families. Experts say Budget 2026 could strike a better balance between lower tax rates and essential incentives, especially for healthcare, housing, and long-term savings.
Tax professionals are urging the government to expand deductions under the new regime to make it more practical and attractive. Housing loan interest, medical insurance premiums, and retirement savings top the wish list.
"Here is what I as an SEBI Registered Investment Advisor think government should focus on: Simplifying the new tax regime by integrating key deductions such as housing loan interest, medical insurance under Section 80D (raised to Rs 50,000 for self/family and Rs 1 lakh for seniors), and a potential 25% slab for Rs 30-50 lakh earners would ease compliance burdens and provide equitable relief amid rising living costs. These changes would empower families to allocate more towards productive investments rather than litigation-prone structures", Prashant Mishra, founder and CEO, Agnam Advisors, said to Money Control.
Healthcare costs remain one of the biggest concerns ahead of Budget 2026. Medical inflation in India stands between 11.5% and 14%, among the highest in Asia. While steps such as removing GST on insurance premiums and allowing 100% FDI in insurance can help, experts say stronger policy support is still needed.
Srikanth Kandikonda, Chief Financial Officer, ManipalCigna Health Insurance, highlighted the need for higher public spending. "Currently, public health expenditure in India remains below global benchmarks and even short of the National Health Policy target of 2.5% of GDP in 2025. Enhancing the budgetary outlay for public health would strengthen primary care networks, expand preventive services, and relieve financial stress on citizens," he said.
Experts also want the Budget to promote preventive healthcare through better tax incentives. Kandikonda said, "At the same time, policy measures that encourage preventive healthcare can significantly lower long-term treatment costs. Industry reports indicate that preventive care reduces hospitalisations and improves health outcomes. Introducing separate and enhanced tax benefits for OPD services and preventive health screenings, beyond the current limits under Section 80D, would encourage wider adoption of preventive care."
Such measures, experts believe, could particularly benefit senior citizens if included directly in the new tax regime.
Beyond salaried taxpayers, high-net-worth individuals are also watching Budget 2026 closely. Mishra said reforms around retirement savings, green investments, and GIFT City could support long-term wealth planning.
"Rationalising surcharges, extending tax-neutral LLP reorganisations, and clarifying TDS on partners' remuneration would streamline family office operations, fostering smoother wealth transfers across generations. Family-centric boosts, like higher allowances for the elderly and child care, address demographic shifts, unlocking productivity for working professionals," he said.
Market experts believe a clearer and fairer tax structure could directly support economic growth. Shubham Gupta, CFA and Co-founder of Growthvine Capital, said, “As we get closer to the 2026 Union Budget, the focus of both taxpayers and businesses is on developing a fairer, more simplified, and predictable new tax regime, which many believe will improve household consumption and savings.”
With Finance Minister Nirmala Sitharaman set to present the Budget soon, taxpayers hope the government uses this moment to strengthen financial security, promote insurance adoption, and make the new tax regime truly people-friendly.
