IRS announces higher standard deductions for 2027

The Brief The Internal Revenue Service announced tax year 2027 inflation adjustments, expanding standard deductions and brackets under the Working Families Tax Cuts. Married couples filing jointly will receive a standard deduction of $33,200, while single filers get $16,600. Eligible parents can claim a higher child tax credit of $2,300, with $1,800 available as refundable cash. WASHINGTON - Millions of American households will see larger standard deductions and broader tax brackets after federal revenue officials announced inflation adjustments for the 2027 tax year. The modifications outlined by the Internal Revenue Service apply to almost 70 individual and corporate tax provisions, which will appear on tax forms filed in 2028. New income tax brackets What we know: The lowest marginal tax rate begins at 10% on earnings up to $12,800 for single taxpayers and $25,600 for married couples filing jointly. The remaining rates climb from 12% to 35% across adjusted income bands, while the top bracket remains at 37% for individual filers making more than $661,375 and joint filers earning above $793,650. Child tax credit changes Why you should care: Working parents qualify for a maximum child tax credit of $2,300 per child, marking a $100 bump from the previous year. Up to $1,800 of the credit is refundable, putting more cash back into the hands of eligible parents who owe little or no tax. Higher deduction dollar amounts By the numbers: Married couples filing jointly will see their standard deduction climb by $1,000 to $33,200. Single individuals and married taxpayers filing separately qualify for $16,600, while heads of households can deduct $24,925. Working Families Tax Cuts What they're saying: "Hardworking American taxpayers will continue to benefit from the Working Families Tax Cuts (WFTC) and will see WFTC credits and deductions increase with this adjustment," said IRS Chief Executive Officer Frank J. Bisignano. "American individuals and businesses will see increased tax benefits next tax year ranging from an increase in the standard deduction and the Child Tax Credit for families, and a boost to the amount that can be expensed by businesses," Bisignano added. Additional federal tax updates By the numbers: Families adopting children can claim maximum expense credits up to $18,250, with a refundable limit set at $5,280. The Earned Income Tax Credit jumps to a peak of $8,496 for low-to-moderate-income workers raising three or more qualifying children. Businesses can expense up to $2,640,000 of section 179 property, while the cap for sport utility vehicles sits at $33,100. Companies providing child care benefits can tap a maximum tax credit of $515,943.67, which rises to $619,132.40 for qualified small businesses. The alternative minimum tax exemption increases to $93,000 for unmarried filers and phases out at $515,950, while joint filers see a $144,700 exemption phasing out at $1,031,900. Heirs receive relief through an estate tax exclusion of $15,480,000, while donors can give up to $20,000 yearly per recipient without triggering gift taxes. Workers giving gifts to a non-citizen spouse receive an annual exclusion of $201,000, and Americans earning income abroad can exclude up to $137,300. For health and commuter benefits, employees can contribute $3,500 to health flexible spending accounts with a $700 carryover limit, while parking and transit benefit limits rise to $350 monthly. Self-only Medical Savings Accounts require deductibles between $3,000 and $4,550 with a $6,050 out-of-pocket maximum, while family plans mandate deductibles between $6,050 and $9,050 with an $11,050 out-of-pocket ceiling. Rules on exemptions, deductions What we don't know: The agency did not provide an inflation adjustment for personal exemptions, keeping them set at zero under permanent provisions established by the Working Families Tax Cuts. Officials also preserved the complete removal of overall itemized deduction limitations for most filers, while capping itemized deductions solely for top-bracket taxpayers earning in the 37% range. Additionally, authorities did not adjust the phase-out range for the Lifetime Learning Credit, keeping it locked between $80,000 and $90,000 for single filers and between $160,000 and $180,000 for joint returns. The Source: The information in this story was gathered from an official news release published by the Internal Revenue Service and distributed by IRS Media Relations contact Alejandra Castro. Money Consumer News