Key 2027 Tax Changes: New Brackets, Standard Deduction and Credits

2027 standard deduction

2027 income tax brackets

All seven tax rates stay the same, from 10% to 37%. The income ranges for each rate are raised for inflation, which helps keep a cost-of-living raise from pushing you into a higher bracket (“bracket creep”).

Child Tax Credit and Earned Income Tax Credit

• Child Tax Credit: up to $2,300 per qualifying child, up $100. Up to $1,800 of it is refundable.
• Earned Income Tax Credit (EITC): the maximum rises to $8,496 for taxpayers with three or more qualifying children, up from $8,231.
• Adoption credit: up to $18,250, up from $17,670.

Estate and gift tax

• Estate and gift tax exclusion: $15.48 million per person for 2027, up from $15 million.
• Annual gift exclusion: $20,000 per recipient, up from $19,000.

For employers and employees

• Transportation and parking benefits: the monthly limit rises to $350, up $10.
• Health flexible spending accounts (FSA): employees can set aside up to $3,500, up $100. Plans that allow a carryover can carry up to $700.
• Section 179 expensing: the maximum rises to $2,640,000.

Other 2027 adjustments

• Foreign earned income exclusion: $137,300, up from $132,900.
• Alternative minimum tax (AMT) exemption: $93,000 for unmarried individuals and $144,700 for married couples filing jointly.

Source: IRS news release IR-2026-133: tax inflation adjustments for tax year 2027 (Revenue Procedure 2026-35).

What this means for your planning

Higher brackets and a larger standard deduction can change how much you should withhold or pay in estimated taxes next year. The higher gift exclusion and FSA limits are worth a look before you make 2027 elections. At DeLaney & Co. CPA, we help individuals, families and business owners in Lancaster, Pickerington and across Fairfield County plan for these changes.