Investment Options for People in the 30% Tax Bracket

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Under the new tax regime for FY 2025–26, the highest tax rate of 30% applies once taxable income crosses ₹24 lakh. Under the old tax regime, the same 30% rate is applied at a much lower threshold of ₹10 lakh.

As an individual falling in the 30% tax bracket, you must recognise that a large part of your incremental income (above ₹24 lakh or ₹10 lakh) is taxed at the highest marginal rate. 

At this level, the choice of investment is no longer only about returns! If investments are selected without considering their tax treatment, the post-tax returns can be significantly lower. So what to do? This article talks about 4 investment options that you may consider in 2026. 

4 Investment Options for People in the 30% Tax Bracket in 2026

High-income earners, like you, may prefer financial products that:

• Reduce taxable income
• Defer taxation
• Offer tax-free interest or maturity proceeds

Below are four investment options that investors in the 30% tax bracket may consider in 2026:

1. Public Provident Fund

The PPF is a savings scheme launched by the Government of India in 1968. A PPF account has a lock-in period of 15 years and can be opened at any post office or authorised bank. 

Realise that PPF falls under the “EEE (Exempt–Exempt–Exempt) category”. This means tax is not charged at any stage. Let’s see how:

For more clarity, let’s check out some primary features of PPF:

A) Safety

PPF is backed by the Government of India, and its returns are not linked to market movement. There is no exposure to equity or interest rate volatility. Both the principal invested and the interest earned carry a sovereign guarantee. 

B) Deposit Flexibility

PPF allows investors to choose how and when they invest during a financial year. Contributions can be made:

• Monthly
• Annually
• Through multiple instalments

However, the total investment in a year cannot exceed ₹1.5 lakh.

C) Partial Withdrawals

PPF permits partial withdrawals after the account has completed seven financial years. Investors can withdraw up to 50% of the “eligible balance” (calculated using prescribed rules).

D) Loan Facility

A loan facility is available against the PPF balance from the third to the sixth year of the account. The loan amount depends on the accumulated balance and must be repaid within a specified period.

E) Nomination

PPF also comes with a nomination facility where you nominate one or more family members. In the event of the account holder’s death, the nominated person can claim the balance without legal complications.

2. Equity Linked Savings Scheme (ELSS)

An ELSS is a type of mutual fund that invests at least 80% of its assets in equity or equity-related instruments. This scheme qualifies for tax deduction under Section 80C of the Income Tax Act.

• You can claim a deduction of up to ₹1.5 lakh per financial year (under the old regime).
• This reduces your taxable income directly.
• For someone in the 30% tax bracket, investing ₹1.5 lakh can lead to tax savings of up to ₹46,800 (including cess).

Note that there is no limit on how much you can invest, but only ₹1.5 lakh is eligible for tax deduction. For a better understanding, let’s check out some primary features of this investment option:

A) Lock-in Period

ELSS comes with a mandatory lock-in period of three years. It is considered the shortest lock-in among all Section 80C options.

B) Taxation of Returns

Returns from ELSS are always taxed as Long-Term Capital Gains (LTCG). After the latest amendments introduced under the Union Budget 2025, LTCG up to ₹1.25 lakh per year is exempt, and only gains above ₹1.25 lakh are taxed at a flat rate of 12.5%. 

C) Might Suit Investors with a High Risk Appetite

This financial product may be more suitable for long-term investors willing to accept market risk and can tolerate short-term market fluctuations.

3. National Pension Scheme (NPS)

The NPS is a government-regulated retirement savings scheme managed by the Pension Fund Regulatory and Development Authority (PFRDA). The primary purpose? Let individuals:

• Build a retirement corpus during their working years 

• Receive a pension after retirement

NPS allows you to invest money regularly into a pension account. This money is invested in a mix of:

• Equity (shares)
• Corporate debt
• Government bonds

The returns depend on market performance, and there is no fixed interest rate offered. 

At retirement, part of the accumulated amount can be withdrawn, and the remaining portion must be used to buy an annuity, which provides a monthly pension.

NPS is commonly used by people in the 30% tax bracket because of its higher tax-saving limits. Let’s check them out:

A) Self Contribution (Old Tax Regime Only)

In this case, a maximum deduction of ₹2 lakh can be availed every financial year.

B) Employer Contribution (Old & New Regime)

Note that this is one of the few deductions allowed even under the new tax regime.

4. Unit Linked Insurance Plan (ULIP)

A ULIP is a financial product that combines life insurance + market-linked investments in one plan. Again, this investment option is considered by people in the 30% tax bracket because it offers:

• Tax deductions on premiums 

and

• Tax exemptions on maturity and death benefits (subject to conditions under the Income Tax Act).

Note that when you pay a ULIP premium, it is split into two parts:

For more clarity, let’s check out some primary features of this financial product:

A) Lock-in Period

ULIPs have a mandatory lock-in of 5 years. No full or partial withdrawal is allowed during this period. 

B) Tax Deduction on Premiums – Section 80C

Premiums paid are eligible for deduction up to ₹1.5 lakh per year. This benefit is available only under the old tax regime.

C) Tax-Free Maturity and Death Benefits – Section 10(10D)

ULIP proceeds are tax-free, subject to these conditions:

If these conditions are met:

• Maturity amount is exempt

and

• Death benefit is tax-free, regardless of the premium amount

However, if the above conditions are not met, returns are taxed as LTCG. Any gains above ₹1.25 lakh are taxed at 12.5%.

D) Partial Withdrawals and Taxation

Partial withdrawals are allowed after 5 years. Any withdrawal made after the lock-in is tax-free. In contrast, withdrawals before 5 years are treated as “regular income” and taxed as per your applicable slab rate.

To Conclude, High-Income Earners May Prefer PPF, ELSS, NPS, or ULIP in 2026

So now you are aware of some investment options that offer tax-free maturity, exempt interest, or Section 80C deductions at the time of investment. If we were to recap, these financial products may include:

• PPF, which offers tax-free interest + maturity
• ELSS, which exposes you to “equity growth” and comes with the Section 80C benefit
• NPS, which lets you save for retirement and offers tax deductions
• ULIP, which is a combination of insurance benefits and comes with tax-free maturity

In addition, investors may also consider tax-free government bonds issued by PSUs such as NHAI, IRFC, and similar entities. To explore such bonds or other AAA-rated bond series, you may visit the GoldenPi platform. 

Here, you can review multiple bond collections or even apply to the latest NCD IPOs. The entire process is 100% digital and can be completed online without any in-person branch visits. 

FAQs on 4 Financial Products For Investors in 30% Tax Bracket (2026)

1. Is the maturity amount from a ULIP tax-free?

Yes, the maturity amount from a ULIP is tax-free under Section 10(10D), provided policy conditions are met.

2. Can I switch funds within a ULIP, and is it treated as a withdrawal?

Yes, ULIPs allow fund switching between equity, debt, or hybrid options. Such switches are not treated as withdrawals and do not attract tax.

3. What tax deduction is available for NPS under the new tax regime?

Under the new tax regime, employer contributions to NPS under Section 80CCD(2) can be claimed as a deduction (subject to prescribed salary limits). Note that self-contribution deductions under Sections 80C and 80CCD(1B) are available only under the old regime. 

4. Does NPS offer a fixed interest rate?

No, NPS does not offer a fixed interest rate. The scheme invests in equity, corporate debt, and government securities. Thus, returns depend on market performance, asset allocation, and fund manager choice. 

5. What is the current PPF interest rate in 2026?

As of January 29, 2026, the Public Provident Fund (PPF) offers an interest rate of 7.1% per annum, as notified by the Government of India. The interest is fully tax-free, and rates are reviewed quarterly.

6. Can I exit an ELSS investment before three years?

No, ELSS funds have a mandatory lock-in period of three years. Investors cannot redeem or withdraw units before this period ends.

Citations

1. https://incometaxindia.gov.in/Charts%20%20Tables/Tax%20rates.htm

Disclaimer:

This information is for general information purposes only. GoldenPi makes no guarantee on the accuracy of the data provided here; the information displayed is subject to change and is provided on an as-is basis. Nothing contained herein is intended to or shall be deemed to be investment advice, implied or otherwise. Investments in the securities market are subject to market risks. Read all the offer-related documents carefully before investing.

Bonds or non-convertible debentures (NCDs) are regulated by the Securities and Exchange Board of India and other government authorities. GoldenPi Securities Private Limited is a registered debt broker and acts as a distributor and not as a manufacturer of the product.