Union Budget 2026 | What Middle-Class Families Want On Taxes, Loans And Home Buying

The new tax regime has gained traction largely due to its simplicity. Within this framework, the standard deduction plays an important role in easing tax outgo.

Any meaningful increase beyond the current Rs 75,000 level would directly improve take-home pay and monthly cash flows.

Source : ABPLIVE AI

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As India heads into Union Budget 2026, expectations from households are fairly straightforward. Keep taxes predictable. Improve access to credit. Make big-ticket goals like home ownership more affordable. For families balancing rising costs with long-term financial planning, small changes in policy can have a meaningful impact on monthly budgets.

Income Tax and the Pressure of Rising Costs

One of the most closely watched areas remains personal income tax. While tax rates themselves have not changed for years, the cost of living certainly has. Housing, healthcare, and education expenses have risen steadily, often faster than salary increments.

This has meant that many salaried individuals move into higher tax brackets simply because of nominal pay hikes, not because their real purchasing power has improved. This effect, commonly referred to as bracket creep, has gradually reduced disposable income for the middle class. Adjusting higher tax thresholds in line with inflation could help ensure that tax burdens better reflect real income growth.

Simpler Relief Under the New Tax Regime

The new tax regime has gained traction largely due to its simplicity. Within this framework, the standard deduction plays an important role in easing tax outgo. Any meaningful increase beyond the current Rs 75,000 level would directly improve take-home pay and monthly cash flows.

There is also growing interest in simpler incentives for long-term financial protection. A flat, consolidated deduction covering essentials such as term life insurance, health insurance, and pension products could encourage disciplined savings without reopening the complexity associated with the old tax regime’s multiple sections.

Digital Credit: Faster, Easier Access

India’s digital payments ecosystem has already transformed everyday transactions. The next area of improvement is credit access. For many first-time borrowers, small businesses, and informal workers, loan processing can still be time-consuming and documentation-heavy.
Further investment in digital systems such as DigiLocker-linked records, Account 

Aggregators, and agentless Video KYC can make borrowing faster and more transparent. For consumers, this means quicker loan approvals, fewer physical documents, and potentially lower costs when accessing loans or insurance.

Housing Affordability and Upfront Costs

Housing remains the single largest financial decision for most households. One expectation from Budget 2026 is a revision in the definition of affordable housing to reflect current market prices. Raising the affordable housing cap beyond Rs 45 lakh would allow more buyers to qualify for lower GST rates.
Lower upfront costs make a tangible difference. They reduce the initial financial strain and improve overall loan affordability. For salaried buyers, this can ease the transition from renting to owning without stretching household finances too thin.

Support for Small Businesses and Jobs

Small businesses are both employers and credit consumers. Beyond easier access to loans, measures that help MSMEs attract and retain skilled employees can support income stability across households. Extending employee stock option tax benefits to Udyam-registered MSMEs is one such step that could strengthen formal employment while encouraging long-term participation in growing businesses.

What This Means for Consumers

Taken together, the expectations from Budget 2026 are less about sweeping announcements and more about practical improvements. Higher take-home income, simpler savings incentives, easier access to credit, and more affordable housing directly influence household financial confidence. For consumers, these incremental changes matter. They shape how families plan, borrow, spend, and save in an economy where costs are rising, but aspirations remain firmly intact.

(The author is CEO, BankBazaar.com. This article has been published as part of a special arrangement with BankBazaar)

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