The IRS has announced higher federal income tax brackets for 2027, along with increases to the standard deduction and child tax credit. The changes apply to tax returns filed in 2028.
The IRS on Thursday announced new federal income tax brackets for 2027, adjusting the higher income thresholds for inflation, according to a news release from the IRS. The changes will be reflected in tax returns filed in 2028.
The IRS adjusts tax brackets every year for inflation so that a household reporting nominally higher income, but not an increase in buying power, does not tip over into a higher bracket. The seven marginal tax rates for 2027 are:
The standard deduction, which is applied by about 9 of 10 taxpayers, is also rising in 2027, according to the IRS. The standard deduction for next year will increase to $33,200 for married couples filing jointly, up $1,000 from 2026. The standard deduction will rise to $16,600 for single taxpayers and married individuals filing separately. The standard deduction will be $24,925 for heads of households.
The child tax credit will increase by $100 to $2,300 in 2027. The amount of credit that may be refundable is $1,800, also up $100 from last year.
The annual exclusion for gifts will increase to $20,000 in 2027, up from $19,000 in 2026.
The IRS also increased the lifetime gift and estate tax exemption. Wealthy Americans will be able to give their heirs up to $15.48 million in 2027 tax-free. The exemption applies to tax-free transfers during life and at death.
The maximum allowable credit for adoption expenses will rise to $18,250, of which up to $5,280 may be refundable.
The Earned Income Tax Credit is increasing to a maximum of $8,496 for qualifying taxpayers who have three or more children, up from $8,231 in 2026.
The IRS adjusts the income ranges for each tax rate yearly based on the consumer price index. The new tax brackets come as Americans continue to wrestle with affordability issues amid the rising cost of housing, groceries, gas and other expenses. Personal exemptions will remain at zero, as they did in 2026.
Sources
This article was drafted with AI assistance and checked against the sources above. Company claims are reported as claims. Cover image is AI-generated.
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