IRS raises 2027 standard deduction and child tax credit in its annual inflation adjustments

The IRS’s decision to raise the 2027 standard deduction and child tax credit signals a notable shift in tax policy that will directly impact disposable income and consumer spending patterns. For middle-market credit professionals, these inflation adjustments could alter borrower cash flow profiles and creditworthiness assessments, influencing lending decisions and risk models. Understanding how these changes affect borrowers’ financial flexibility is essential for accurately pricing risk and anticipating shifts in default probabilities across the middle-market credit landscape.