New IRS Tax Rules for 2027 Could Mean More Money in Americans’ Pockets

The IRS has announced new federal tax brackets for 2027, and the changes could help Americans keep more of their money. The update comes as families deal with higher costs for groceries, housing, and other daily needs.

Under the new rules, married couples filing taxes together will get a standard deduction of $33,200. Single taxpayers will be able to deduct $16,600, giving both groups a larger tax break than in 2026.

The IRS is also raising the income limits for federal tax brackets. This means workers can earn more before a higher tax rate applies to part of their income.

Families with children could see another benefit, as the maximum child tax credit will increase to $2,300 per qualifying child. These changes apply to money earned in 2027, with tax returns filed in 2028.

A Bigger Deduction

According to the IRS announcement released November 5, the standard deduction for married couples filing jointly will increase by $1,000, from $32,200 to $33,200.

Single taxpayers will see their deduction rise by $500, from $16,100 to $16,600. People filing as heads of household will qualify for a $24,925 deduction.

The standard deduction is the amount taxpayers can subtract from their income before calculating federal income taxes.

For example, a single person earning $50,000 who takes the new standard deduction would have $33,400 left to be taxed, before any other adjustments. The deduction does not mean they receive a $16,600 refund.

Higher Income Limits

Federal income tax rates will remain between 10% and 37%, but the amount of money covered by each rate is changing.

In 2027, single taxpayers will pay the lowest 10% rate on their first $12,800 of taxable income. The 12% rate applies to income above that amount, up to $52,025.

For married couples filing jointly, the 10% rate covers the first $25,600. The 12% rate applies to income above that amount, up to $104,050.

Higher earners will see changes too. The top 37% rate will apply to taxable income above $661,375 for single taxpayers and $793,650 for married couples filing jointly.

Moving into a higher bracket does not mean every dollar someone earns is taxed at that rate. Only the portion of income within that bracket faces the higher percentage.

More Help For Families

Parents may also benefit from changes to the child tax credit. The maximum amount will increase from $2,200 to $2,300 per qualifying child.

Eligible families may receive up to $1,800 of that credit as a refund, even if they do not owe enough federal income tax to use the full amount.

The IRS is also increasing the earned income tax credit for qualifying workers. Families with three or more qualifying children could receive up to $8,496, compared with $8,231 in 2026.

Other updates affect adoption expenses, workplace health savings plans, and gifts. The annual gift tax exclusion, for example, will rise from $19,000 to $20,000 per recipient.

The changes are part of the IRS’s yearly inflation adjustments, which cover nearly 70 tax rules. The agency published the complete figures in Revenue Procedure 2026-35.

Americans filing their taxes in early 2027 will still use the rules for the 2026 tax year. The newly announced figures generally apply to income earned beginning January 1, 2027.