IRS sets 2027 standard deduction at $33,200 for married couples

The Internal Revenue Service released the inflation adjustments for the 2027 tax year on Wednesday.

The standard deduction will rise to $33,200 for married couples filing jointly, an increase of $1,000 from the 2026 figure. Single filers and those married but filing separately will see a deduction of $16,600, while heads of household will claim $24,925. These figures apply to returns filed in 2028.

Income tax brackets have also shifted to reflect inflation. The top marginal rate remains 37%, but the threshold for that bracket moves to $661,375 for single filers and $793,650 for married couples filing jointly. The other tax rates of 35%, 32%, 24%, 22%, 12%, and 10% will apply to lower income tiers.

The child tax credit will increase by $100 to a maximum of $2,300 per child. The refundable portion of this credit will also rise by $100 to $1,800. The Earned Income Tax Credit will reach a maximum of $8,496 for eligible taxpayers with three or more children, up from $8,231 in the previous year.

Other provisions include a $3,500 limit for employee contributions to flexible spending accounts for health care costs, with a carryover limit of $700. The maximum adoption credit is set at $18,250, with up to $5,280 available as a refund. The annual gift tax exclusion will increase from $19,000 to $20,000. Personal exemptions remain at zero.

Frank J. Bisignano, the IRS commissioner, said working taxpayers would continue to benefit from the Tax Cuts and Jobs Act through these adjustments. "American hard-working taxpayers will continue to benefit from the Tax Cuts and Jobs Act and see their credits and deductions increase with this adjustment," Bisignano stated. The agency noted these changes affect approximately 70 tax provisions.

The adjustments are part of the agency's annual process to account for inflation. Taxpayers will see these new numbers on their forms when they prepare their 2027 returns, which are due in 2028.