IRS raises Child Tax Credit and standard deduction for the 2027 tax year

Inflation changes will affect tax returns filed in 2028, including a higher standard deduction for married couples filing jointly and a larger Child Tax Credit.

The Internal Revenue Service has announced inflation-related updates for the 2027 tax year, affecting the standard deduction, income tax brackets and several tax credits.

IRS CEO Frank J. Bisignano said, “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.”

The revised amounts will generally show up on tax returns filed in 2028.

For the 2027 tax year, the standard deduction for married couples filing jointly will be $33,200, which is $1,000 more than in 2026. The deduction will be $16,600 for single filers and married people filing separately, and about $24,925 for heads of household.

The top tax rate will stay at 37% and will apply to single taxpayers with income above $661,375 and married couples filing jointly with income above $793,650. Other brackets will remain at 35%, 32%, 24%, 22%, 12% and 10%, depending on income.

The Child Tax Credit will also rise. The maximum credit for 2027 will be $2,300, up $100 from 2026.

The maximum refundable portion will increase to $1,800, also $100 higher than the prior year.

Other changes announced

The Earned Income Tax Credit will reach a maximum of $8,496 for eligible taxpayers with three or more children, compared with $8,231 in 2026.

Employee contributions to health flexible spending accounts will be capped at $3,500, and up to $700 may be carried over unused.

The maximum adoption expense credit will rise to $18,250, with as much as $5,280 available as a refundable amount.

The annual gift tax exclusion will climb from $19,000 to $20,000 in 2027, while personal exemptions will remain at zero, unchanged from 2026.

The IRS said the updates are part of its annual inflation adjustments covering nearly 70 tax provisions, with the 2027 changes applying to returns filed in 2028.