Working Families Tax Cuts Continue Delivering Relief as IRS Updates 2027 Tax Rules

The IRS has announced its inflation adjustments for the 2027 tax year, raising the standard deduction to $33,200 for married couples filing jointly and $16,600 for single filers. The maximum Child Tax Credit will increase to $2,300 per qualifying child, while income tax brackets and other provisions will be adjusted for inflation.

The annual adjustments are a reminder of the broader tax relief enacted through the Working Families Tax Cuts in 2025. The law made lower individual tax rates permanent, expanded deductions for families, and established long-term incentives for business investment and savings.

Permanent Tax Relief for Families and Workers

The Working Families Tax Cuts prevented the expiration of the lower individual income tax rates established in 2017, avoiding a substantial tax increase beginning in 2026. The legislation permanently increased the standard deduction and expanded the Child Tax Credit, with both provisions receiving inflation adjustments in subsequent years.

The law provided additional relief through new deductions for qualified tips, overtime compensation, and interest on loans for eligible American-made vehicles. Seniors received an additional deduction, while families benefited from expanded opportunities to save for healthcare, education, and retirement.

The 2027 adjustments build on these provisions. The standard deduction will rise by $1,000 for married couples filing jointly and $500 for single filers compared with 2026. The death tax exemption will increase to $15.48 million, providing greater protection for family-owned businesses and farms.

Business Tax Relief and Long-Term Economic Growth

The Working Families Tax Cuts established permanent tax provisions intended to encourage investment and strengthen American businesses. Full expensing allows companies to immediately deduct the cost of qualifying equipment and machinery, while the restoration of immediate deductions for domestic research and development expenses reduces the cost of innovation.

The legislation expanded small business tax relief and maintained key international tax reforms. By making these provisions permanent, Congress reduced uncertainty over future tax liabilities and gave employers a stronger basis for long-term investment decisions.

Other provisions expanded access to Health Savings Accounts, established Trump Accounts to encourage savings for children, and created a permanent federal tax credit for donations to Scholarship Granting Organizations supporting educational choice. The legislation included Medicaid and SNAP work requirements and additional measures intended to strengthen program integrity.

A Lasting Legislative Achievement

The Working Families Tax Cuts were among the major legislative achievements of House Speaker Mike Johnson's tenure. The legislation secured permanent changes to the tax code that would otherwise have faced expiration, providing greater certainty for taxpayers and businesses.

While the IRS will continue adjusting tax provisions for inflation each year, the underlying tax relief remains in place. The 2027 changes offer another opportunity to examine the broader benefits of a law that reduced taxes, encouraged investment, and expanded savings opportunities.

CFE has examined these provisions in its Working Families Tax Cuts video series, which details the law's benefits for workers, families, seniors, small businesses, and family-owned farms.

CFE Takeaway

The IRS's 2027 inflation adjustments highlight the continuing benefits of the Working Families Tax Cuts. Permanent lower tax rates, higher standard deductions, an expanded Child Tax Credit, and incentives for business investment provide a more stable foundation for economic growth. Congress should preserve these reforms and pursue additional policies that allow Americans to keep more of their earnings, save for the future, and invest in their businesses.