IRS sets higher Child Tax Credit and deductions for 2027

The Internal Revenue Service increased the Child Tax Credit for the 2027 tax year. The maximum credit will reach $2,300, a $100 rise from the 2026 amount.

The refundable portion of that credit will also grow. Taxpayers can now claim up to $1,800 in refundable amounts, which is also $100 more than last year.

Standard deductions are rising as well. Married couples filing jointly will see their deduction increase to $33,200. Single filers and married individuals filing separately will receive a deduction of $16,600. Heads of household will see a deduction of approximately $24,925.

The top income tax rate remains at 37%. This rate applies to single taxpayers earning more than $661,375 and married couples filing jointly earning more than $793,650. Other rates range from 10% to 35% based on income levels.

Several other credits and limits are adjusting for inflation. The Earned Income Tax Credit maximum for families with three or more children will rise to $8,496. The annual gift tax exclusion is increasing from $19,000 to $20,000.

Personal exemptions will stay at zero for 2027. The maximum credit for adoption expenses is rising to $18,250, with up to $5,280 potentially refundable. Employee contributions to health flexible spending accounts will have a new limit of $3,500, with a carryover cap of $700.

IRS CEO Frank J. Bisignano said these adjustments help hardworking taxpayers benefit from the Working Families Tax Cuts. The agency noted that these changes apply to returns filed in 2028. The IRS is making similar inflation adjustments to nearly 70 other tax provisions.