The Modi government is likely to announce a major tax relief for married taxpayers in the Union Budget 2026–27, with the introduction of an optional joint taxation system under consideration. The Budget will be presented in Parliament on February 1 by Union Finance Minister Nirmala Sitharaman, with the Budget Session scheduled to run from January 28 to April 2.

According to reports, the Ministry of Finance is examining a proposal that would allow husbands and wives to file their income tax returns jointly, marking a significant shift from India’s existing individual-based taxation structure. If implemented, the move could substantially reduce the tax burden for many families, particularly those with a single earning member.

How India’s Current Tax System Treats Married Couples

At present, India’s income tax framework does not distinguish between married and unmarried individuals. Each taxpayer is assessed separately, with individual Permanent Account Numbers, exemptions, deductions and slab rates. While this ensures simplicity and individual accountability, it creates a disadvantage for households where only one spouse earns.

In such cases, the basic exemption limit of the non-earning spouse remains unused, and the family is taxed entirely on the income of the earning member. Tax experts point out that this often pushes single-income families into higher tax slabs, increasing their overall liability despite modest household earnings.

The issue has been flagged repeatedly by professional bodies, including the Institute of Chartered Accountants of India, which has recommended introducing an optional joint tax filing mechanism. The proposal is aimed at recognising families as a single economic unit rather than a collection of individuals.

What Joint Taxation Could Mean for Taxpayers

Under the proposed system, the combined income of a husband and wife would be aggregated and taxed together, possibly under revised tax slabs. While final details are yet to emerge, reports suggest that the basic exemption limit could be enhanced for joint filers, allowing better utilisation of tax-free thresholds.

Deductions related to home loan interest, health insurance premiums and other allowances could also be structured more efficiently under a joint assessment. Even in cases where both spouses are earning, there may still be scope for claiming separate standard deductions, ensuring that dual-income households are not disadvantaged.

Another key element under discussion is surcharge relief. Currently, a surcharge applies on income exceeding ₹50 lakh. Under joint taxation, this threshold could be raised to ₹75 lakh or higher, providing relief to middle- and upper-middle-income families. Any moderation in surcharge rates would significantly ease the tax burden for households close to these thresholds.

How Other Countries Tax Married Couples

Several countries already follow family-based or joint taxation systems. In the United States, married couples can choose to file jointly or separately. Joint filing typically offers wider tax brackets and higher combined deductions, making it beneficial for couples with unequal incomes.

Germany follows an income-splitting model, where the combined income of a married couple is divided equally between spouses for tax calculation. This significantly lowers the effective tax rate for single-income or uneven-income households.

Portugal also allows married couples and legally recognised civil partners to choose between joint and separate tax filing each year. Under its joint taxation system, the combined income of both spouses is added together and then divided by two. Tax is calculated on this halved amount using progressive slabs, and the final liability is arrived at by doubling the calculated tax. This system particularly benefits single-income families or couples with large income disparities, while couples with similar earnings can opt for separate filing if it is more advantageous.

France, meanwhile, follows a family quotient system, where household income is divided by the number of family units, including dependants, before tax is calculated, directly linking tax liability to family size.

If implemented, joint taxation would represent one of the most significant changes to India’s income tax regime in decades. While the proposal remains under consideration, expectations are high that Union Budget 2026 could deliver a structural shift towards a more family-centric approach to taxation.

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