Working Families Tax Cut Act

This bill would rename the “standard deduction” to the “guaranteed deduction” throughout the tax code starting with the 2026 tax year. It would also give taxpayers an extra “bonus” amount on top of that deduction for 2026 and 2027 to help lower their taxable income. The bill is called the Working Families Tax Cut Act.

For 2026 and 2027, the bonus amount would be:

• $4,000 for married couples filing jointly and surviving spouses, $3,000 for heads of household, and $2,000 for single and all other filers; the 2027 amounts would be adjusted for inflation.
• The bonus would phase out for higher incomes: above $400,000 (married filing jointly), $300,000 (head of household), and $200,000 (others).

Key points

• Who is affected: Most taxpayers who claim the standard deduction (now called the guaranteed deduction).
• What changes: New name for the deduction, plus a temporary bonus amount in 2026 and 2027 that lowers taxable income, with a phase-out at higher incomes and inflation adjustment in 2027.
• When: Applies to tax years starting after December 31, 2025; the bonus applies only for 2026 and 2027.