IRS: Inflation adjustments raise key tax thresholds for 2027
The agency announced a $100 increase to the Child Tax Credit and higher standard deductions, with changes applying to returns filed in 2028.
By Lily Carter ·
The Internal Revenue Service released its annual inflation adjustments for the 2027 tax year on Thursday. The update increases the standard deduction, raises the top income tax brackets, and expands several tax credits, including the Child Tax Credit and the Earned Income Tax Credit. These figures will be used by taxpayers when they file their returns in 2028.
IRS CEO Frank J. Bisignano stated that the changes continue the benefits of the Working Families Tax Cuts. He noted that credits and deductions will increase with this adjustment for hardworking American taxpayers.
The standard deduction for married couples filing jointly will rise by $1,000 to $33,200 in 2027. Single filers and married individuals filing separately will see their standard deduction set at $16,600. Heads of household can claim a standard deduction of approximately $24,925.
The top marginal tax rate remains at 37 percent. This rate applies to single taxpayers with income above $661,375 and married couples filing jointly with income above $793,650. Other applicable tax rates range from 10 percent to 35 percent based on income levels.
The maximum Child Tax Credit will increase by $100 to $2,300 for the 2027 tax year. The maximum refundable portion of this credit will also rise by $100 to $1,800. The maximum Earned Income Tax Credit for eligible taxpayers with three or more children will increase to $8,496, up from $8,231 in 2026.
Other financial limits are also adjusting. The annual gift tax exclusion will increase from $19,000 to $20,000. The maximum credit for adoption expenses will rise to $18,250, with up to $5,280 available as a refund. Employee contributions to health flexible spending accounts will have a limit of $3,500, with a carryover limit of $700. Personal exemptions will remain at zero, consistent with the 2026 tax year.
The agency identified these updates as part of its annual review of nearly 70 tax provisions. All listed changes will apply to tax returns filed in the year 2028.
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