Ahead of the presentation of Union Budget 2026 on February 1, the central government is examining a significant reform in the personal income tax framework. A proposal to introduce a joint taxation system for married couples, allowing them to file a single combined income tax return, is currently under discussion.

Under the existing tax regime, spouses are assessed separately, with individual tax slabs, deductions, and exemptions applicable to each person, regardless of marital status. While this system works efficiently for dual-income households, it poses challenges for families where only one spouse earns an income.

In such cases, the non-earning spouse is unable to fully utilise available tax exemptions, resulting in a higher overall tax liability for the household. To address this imbalance, the concept of joint taxation has been proposed, wherein the incomes of both spouses would be clubbed and assessed together, treating the family as a single economic unit.

Importantly, the proposed framework would be optional. Married couples would be free to continue under the current individual taxation system or opt for joint filing based on what best suits their financial situation.

The proposal has received backing from the Institute of Chartered Accountants of India (ICAI). Similar systems are already operational in countries such as the United States and Germany, where joint tax filing has provided notable relief to single-income households.