What is the story about?
Budget 2026 expectation: The taxation system in the Indian context treats each individual independently, irrespective of his or her marital status. Even
if the individual gets married, the spouses are required to file individual tax returns and claim exemptions. This is not necessarily the case in a family where the incomes and expenses are shared as one. As the Union Budget for 2026-27 draws closer (scheduled by Finance Minister Nirmala Sitharaman for February 1, 2026), there has been a revisit of a significant recommendation made by the Institute of Chartered Accountants of India (ICAI): allowing joint tax returns for married couples.
What is optional joint taxation?
Under the ICAI’s proposal, married couples holding valid PANs would be given the option (not obligation) to file a single combined tax return with their total household income. They could choose this joint taxation India route or stick with the current system of individual filing.
This model of married couples tax relief is already used in several developed economies, including the United States and Germany, where couples can file jointly for tax purposes.
Proposed tax structure under joint filing
ICAI recommends a new taxation slab system where income will be treated as a single unit with increased slabs representing joint income. Though this has yet to be notified by the government, a proposed system recommended by this institute includes:
Upto Rs 8 lakhs: No tax due (basic exemption limit is now effectively doubled)
Progressive slabs beyond Rs 8 lakh culminating in: 30 per cent for income above Rs 48 lakh
The plan also suggests scaled surcharge thresholds for high earnings, which may soften the surcharge effects on high-earning families with joint filing spouses.
Married couples tax relief: How couples could benefit?
Better use of unused exemptions
When the difference between the earnings of the higher-income spouse and the lower-income spouse (or the non-earning spouse) is large, the basic exemption and the lower brackets of the non-earning spouse are lost. Joint filing could trigger the activation of the "idle" potential and help lower the taxes for many families.
Income averaging
Combining incomes can average out higher earnings, lowering the marginal tax rate compared to filing separately, especially useful when one spouse is the sole earner.
Simplified planning & deductions
A joint filing could allow married couples to better utilise deductions (such as interest on home loans, health premiums, and so on) collectively based on their total financial situation. This could also facilitate total tax planning with respect to common investments.
Retiree advantage
For retired couples with pension and investment income, joint taxation could reduce complexity and help with better structuring of taxable income.
Are there any downsides?
Joint taxation won’t benefit everyone. In cases where both spouses earn high incomes, combining their earnings might push the household into a higher tax bracket or surcharge, negating any advantage.
Also, nothing has been officially enacted yet; the government is still considering ICAI’s suggestion as part of broader tax reform discussions in Budget 2026.
