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The Internal Revenue Service (IRS) has announced new tax brackets, deductions and credits for the 2027 tax year.
The changes, revealed on Thursday, impact nearly 70 provisions of the federal tax code. Among the biggest changes are a $1,000 increase in the standard deduction for couples and a $100 boost to the Child Tax Credit, as well as higher income thresholds across all seven tax brackets.
Every year, the IRS makes adjustments to the tax code to account for inflation and rising wages, which helps prevent Americans from paying more tax on their earnings. Sometimes referred to as "bracket creep," this occurs when workers receive pay increases to keep pace with inflation, but then find a greater portion of their income subject to higher tax rates. This is despite seeing no real improvement in their purchasing power.
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"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."
The adjustments follow a slew of new tax laws mandated by the July 2025 One Big Beautiful Bill (OBBBA) and will apply to income earned in 2027 and payable in 2028.
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New Federal Income Tax Brackets
Although the seven income tax brackets remain unchanged, Americans will be able to earn more before moving into a higher tax bracket.
The brackets apply to taxable income after deductions, not total earnings. Higher rates apply to only the portion of income falling within each bracket, rather than that person's entire income.
Standard Deduction Increases
The standard deduction, which allows taxpayers to reduce the amount of income subject to federal tax without needing to itemize, has been raised for 2027.
The deduction will increase to:
- $16,600 for single taxpayers and married individuals filing separately, up from $16,100.
- $33,200 for married couples filing jointly, up from $32,200.
- $24,925 for heads of household, up from $24,150.
Child Tax Credit and Family Benefits
Families with eligible children will also see increases to the maximum Child Tax Credit, which will rise to $2,300 per qualifying child, up from $2,200 in 2026. The maximum refundable portion will increase from $1,700 to $1,800.
The Earned Income Tax Credit, which supports low-income workers, will also increase. For qualifying taxpayers with three or more eligible children, the maximum credit will reach $8,496, up from $8,231.
The Adoption Tax Credit will also rise from $17,670 to $18,250, with up to $5,280 potentially refundable.
Actual payments for taxpayers will depend on factors such as income and the number of qualifying children.
Other Changes
Beyond income taxes, the IRS has announced several other adjustments affecting savings, estates and workplace benefits.
- The federal estate tax exclusion will be boosted to $15.48 million, compared to $15 million in 2026, allowing for more of an individual person's estate to be passed on free from federal tax.
- Annual gift tax exclusion will rise from $19,000 to $20,000 per recipient.
- Workers contributing to Health Flexible Spending Cafeteria Plans, an employer-sponsored benefit that lets employees use pretax salary deduction to pay for medical expenses and other healthcare costs, will see their annual contribution limit rise to $3,500, up by $100.
What Isn't Changing
A couple of tax matters will remain the same for 2027. Personal exemptions will stay at zero, while the income thresholds used to phase out the Lifetime Learning Credit—a tax credit designed to help taxpayers pay for undergraduate, graduate, and professional degree courses—will remain unchanged: $80,000 to $90,000 for individuals and $160,000 to $180,000 for joint filers.
For a full breakdown of every tax change, see the IRS website.
Contact Newsweek editors on this story: Matthew Robinson and James Debens
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