On October 12, 2025, the Internal Revenue Service (IRS) announced a sweeping set of updates to the federal tax code, aiming to cushion American households from the persistent bite of inflation and looming uncertainties in tax policy. The new rules, which will shape how Americans file their 2026 tax returns in 2027, touch nearly every corner of the tax landscape: from widened income tax brackets and higher standard deductions to enhanced credits for families and seniors. While these changes offer immediate relief for millions, they also carry a warning—many of the most generous provisions could vanish if Congress fails to act.
According to agency documents and reporting by CNBC, the IRS has raised the income thresholds for all seven federal tax brackets. The top 37% tax rate for single filers now kicks in at $640,601, up from $626,351, while married couples filing jointly will only face that rate on incomes above $768,700. A single filer earning $50,000, for instance, will remain safely within the 12% bracket, sidestepping what tax professionals call “bracket creep”—the phenomenon where inflation nudges taxpayers into higher brackets without a real gain in purchasing power.
This annual ritual of adjusting brackets, known as indexing, is more than bureaucratic fine-tuning. As CBS News explains, it prevents taxpayers from being penalized simply because their wages kept pace with rising prices. The new thresholds mean that many Americans, especially those in the middle class, will see a slightly lower tax burden in 2027. For a married couple earning $150,000, the math is straightforward: after subtracting the new standard deduction of $32,200, their taxable income lands at $117,800—putting them primarily in the 22% marginal tax bracket. But here’s the twist: in the U.S. progressive tax system, different portions of their income are taxed at different rates, so the benefit of the expanded brackets ripples across their entire return.
The standard deduction itself has seen a notable bump. For 2026, single filers can claim $16,100, up from $15,750 in 2025. Heads of household get $24,150, and married couples filing jointly receive $32,200. These increases, as outlined by Goodreturns.in, give non-itemizers a bigger buffer and make tax filing simpler for millions who don’t have enough deductions to itemize.
Older Americans are getting a special nod from the IRS as well. Thanks to a temporary provision in the One Big Beautiful Bill Act, individuals aged 65 and older can claim an extra deduction of up to $6,000 through 2028, provided their income stays below $75,000 for singles or $150,000 for married couples. This measure, highlighted in both IRS documentation and CBS News, is designed to offer targeted relief to seniors on fixed incomes—though it’s not universal, and those above the income limits won’t qualify.
But the IRS didn’t stop at income taxes. The agency also raised thresholds for long-term capital gains, estate and gift tax exemptions, and eligibility for the Earned Income Tax Credit (EITC). For 2025, the EITC for qualifying taxpayers with three or more children will rise to $8,046, up from $7,830, with phaseout thresholds widened to let more middle-income earners benefit. As MARCA and other outlets have reported, these tweaks reflect a broader legislative push to ensure that modest wage gains aren’t wiped out by steeper taxes or lost credits.
Families with children are set to see some of the most immediate benefits—and face some of the greatest uncertainties. For the 2025 tax year (filed in 2026), the child tax credit increases from $2,000 to $2,200 per qualifying child, with $1,700 of that amount refundable even if the family owes no federal tax. However, unless Congress acts, this expanded credit and other key provisions from the Tax Cuts and Jobs Act (TCJA) are scheduled to expire after 2025. As one economist told MARCA, “But the year following, 2026, families should be expecting to see higher tax liabilities unless Congress votes to extend these tax provisions that were implemented in 2017.”
New rules also require that both the parent (and spouse, if filing jointly) and the child must have Social Security numbers to claim the child tax credit. This change, part of recent reforms, may exclude some mixed-status households from receiving the benefit.
Other family-oriented provisions include increases to the Child and Dependent Care Tax Credit, adoption credits, and annual gift tax exclusions. These changes, while technical, could mean hundreds or even thousands of dollars in savings for qualifying families—provided they keep abreast of shifting eligibility rules and expiration dates.
It’s not just families and middle-income earners who need to pay attention. The IRS confirmed that tax deadlines remain unchanged, despite an ongoing government shutdown that began in October 2025. Taxpayers with an October 15 extension deadline must still file and pay as usual. In a statement to CBS News, an IRS spokesperson emphasized, “Taxpayers should continue to file, deposit, and pay federal income taxes as they normally would; the lapse in appropriations does not change Federal Income Tax responsibilities.”
For those keeping score, the United States’ tax system remains as complex as ever, with seven marginal rates—10%, 12%, 22%, 24%, 32%, 35%, and 37%—but the bands have widened, and deductions have grown. The IRS’s annual adjustments, while automatic and mandated by law, are part of a larger chess game being played in Congress. Many of the most generous credits and deductions are on the clock, set to expire unless lawmakers intervene.
So what’s the upshot for American households? In the short run, most will see some tax relief, especially if their income growth has merely kept pace with inflation. Seniors and families with children stand to gain the most, thanks to expanded deductions and credits. But the future is less certain. With several provisions poised to sunset after 2025, tax planning will be more important than ever. Households are encouraged to review their withholdings, credits, and deductions, and to keep an eye on Congress in the coming months.
For now, the IRS’s latest adjustments offer a measure of stability in an unpredictable economic climate. But as history has shown, tax policy is rarely set in stone, and the next round of changes may be just around the corner.
