The 2027 Tax Changes That Change What You Can Afford: Brackets, Credits, and Florida's $150,000 Homestead Exemption

By Douglas Wilkerson, Mortgage Broker, NMLS #1680719 | November 15, 2026

The Short Answer

Two things changed in the last ten days that move the math on buying a home: the IRS published the 2027 tax numbers on November 5, and Florida voters approved Amendment 3 on November 3. The 2027 standard deduction rises to $33,200 for married couples filing jointly, the child tax credit rises to $2,300 per child, and four new deductions — tips, overtime, car-loan interest, and a $6,000 senior deduction — cut federal tax without cutting the income your lender counts. In Jacksonville, Amendment 3 lifts the homestead exemption on non-school taxes to $150,000 in 2027, which takes about $96 a month off the property tax on a $300,000 home. None of this changes your interest rate. All of it changes what is left in your pocket every month — and for a buyer, the pocket is where the payment comes from.

What Did the IRS Actually Change for 2027?

On November 5, 2026, the IRS released the tax-year 2027 inflation adjustments in news release IR-2026-133, with the details in Revenue Procedure 2026-35. These numbers apply to income earned in 2027, on returns filed in 2028 — they do not change the return you file next spring for 2026. The seven tax rates did not change: 10%, 12%, 22%, 24%, 32%, 35%, and 37%. What moved are the thresholds and the deductions.

The standard deduction for 2027: $16,600 for single filers, $33,200 for married couples filing jointly, and $24,925 for heads of household. That is up $500, $1,000, and $775 from the 2026 amounts ($16,100 / $32,200 / $24,150).

The 2027 brackets (taxable income): the 10% bracket covers the first $12,800 of taxable income for single filers and $25,600 for joint filers. The 12% bracket runs to $52,025 single and $104,050 joint. The top 37% rate starts above $661,375 single and $793,650 joint.

The credits: the maximum child tax credit rises to $2,300 per qualifying child for 2027, up $100 from 2026, with up to $1,800 of it refundable. The maximum earned income tax credit rises to $8,496 for families with three or more qualifying children, up from $8,231.

Here is the honest scale. Take a married couple with two kids under 17 and $110,000 of gross income. For 2027: $110,000 minus the $33,200 standard deduction is $76,800 of taxable income. The tax is $8,704 — $2,560 at 10% on the first $25,600, plus 12% on the remaining $51,200. Subtract two child tax credits of $2,300 each ($4,600) and the federal bill is $4,104. On the 2026 numbers — $32,200 standard deduction, $2,200 credit per child — the bill is $4,440. The 2027 changes save this family $336 a year, or $28 a month. Real money, but not life-changing. The bigger money is in the four new deductions — and in Florida's Amendment 3.

A bigger standard deduction helps everyone a little. The four new deductions help specific buyers a lot — and they work differently from the deductions you already know.

What Are the Four New Deductions — and Who Do They Help?

The One Big Beautiful Bill Act (Public Law 119-21, signed July 4, 2025) created four temporary deductions for tax years 2025 through 2028. They are already on 2025 returns; they run through 2028 unless Congress extends them.

No tax on tips — up to $25,000 a year. Workers in occupations that customarily receive tips can deduct up to $25,000 of qualified tips. The deduction starts shrinking once modified adjusted gross income passes $150,000 ($300,000 joint). Only voluntary tips count — a mandatory service charge does not.

No tax on overtime — up to $12,500 ($25,000 joint). Only the premium half of time-and-a-half counts: if you earn $30 an hour and work overtime at $45, only the $15 premium is deductible. Same income phase-out as tips.

Car-loan interest — up to $10,000 a year. Interest on a loan for a new, personal-use vehicle with final assembly in the United States, for loans taken out after December 31, 2024. The deduction phases out above $100,000 of modified AGI ($200,000 joint). Leases do not qualify.

The senior deduction — $6,000 per person age 65 or older. $12,000 when both spouses qualify. It shrinks by 6% of modified AGI over $75,000 ($150,000 joint). Run it on a retired couple, both 65 or older, filing jointly on $90,000: the $12,000 senior deduction cuts their 2027 federal tax from $6,304 to $4,864 — $1,440 a year, $120 a month — and their qualifying income does not move, because the deduction is below the line.

Now the part that matters for a mortgage application: all four are claimed on Schedule 1-A, below the line — on top of the standard deduction, whether or not you itemize — and none of them reduces your adjusted gross income. That is the detail most coverage gets wrong, and it is the detail that decides what happens to your file.

Will a Bigger Tax Break Raise the Income on My Mortgage Application?

A lender does not qualify you on your taxable income. A lender qualifies you on your gross income — with two important exceptions.

If you are a W-2 employee, your lender counts your gross pay — the number before taxes and deductions. Fannie Mae's Selling Guide (B3-3.1-01) is explicit: base income is gross monthly income. A deduction that lowers your tax bill does not lower the income on your application, because the application never used your after-tax number in the first place. The benefit lands entirely in your take-home pay.

Run it on a real Jacksonville worker. A server earns $36,000 in base pay and $12,000 in tips — $48,000 gross, single filer, 2027. Her tax with the tip deduction: $48,000 minus the $16,600 standard deduction minus the $12,000 tip deduction leaves $19,400 taxable, and the tax is $2,072. Without the tip deduction, the same $48,000 produces a $3,512 bill. The deduction saves her $1,440 a year — $120 a month — and her qualifying income for the mortgage is still the full $48,000, because the deduction sits below the line. Tips are still subject to Social Security and Medicare tax; only the federal income tax is cut.

The second exception runs the other direction, and it is a gift: non-taxable income gets grossed up. Fannie Mae lets a lender add 25% to verified non-taxable income when qualifying a borrower, because a tax-free dollar is worth more than a taxable one. VA disability compensation, most Social Security, and child support all qualify — VA loans allow the same 25% gross-up under the VA Lenders Handbook. A veteran receiving $2,000 a month in VA disability can have it counted as $2,500 a month of qualifying income; for Social Security, 15% is automatically treated as non-taxable. The income the IRS does not tax is the income your lender counts highest.

Tax credits are the third category, and they work differently again. A credit cuts your tax dollar-for-dollar — the $2,300 child tax credit is worth $2,300 off your bill, while a $2,300 deduction is only worth your marginal rate times $2,300. But a credit is not income, and no lender counts it as income. The $8,496 maximum earned income credit for a family with three or more children is real cash that can fund closing costs or build reserves — it just does not raise the income line on the application. Know which bucket each number falls into before you plan around it: deductions cut tax, credits cut tax harder, and only gross income and grossed-up non-taxable income move the application.

What About the Self-Employed? Talk to Your Broker Before You File

Self-employed borrowers are the exception to the gross-income rule, and the 2027 changes make the timing of your tax return a buying decision. If you own 25% or more of a business, Fannie Mae underwrites you on your tax returns — your qualifying income is your net business profit, generally averaged over two years, with non-cash items like depreciation added back. Every business deduction that lowers your net profit also lowers the income your lender can count. That is the permanent tension of self-employment: the deductions that save you tax are the same deductions that shrink your mortgage.

The good news about the four new deductions is that they do not add to that tension: they sit below the line and never touch adjusted gross income or Schedule C net profit, so a self-employed contractor who deducts $10,000 of car-loan interest keeps the tax savings and loses none of his qualifying income. But the ordinary business deductions — mileage, supplies, home office, equipment — still cut both ways. If you are self-employed and planning to buy in 2027, talk to your broker before your 2026 return is filed, not after. The return you file in the spring is the income your lender will use all year.

Tips, overtime, car-loan interest, and the senior deduction cut federal tax without cutting the income a lender counts — because they sit below the line. That is the detail that makes them useful to a buyer, not just to a taxpayer.

What Does Florida's Amendment 3 Do to Your Payment?

The federal changes are only half the story in Jacksonville. On November 3, 2026, Florida voters approved Amendment 3 with about 62% of the vote (61.98% in the unofficial statewide results, above the 60% required). It takes effect January 1, 2027, and it is the biggest property-tax change in recent Florida history.

Here is what it does. For homeowners who were Florida permanent residents on December 31, 2026, the homestead exemption on non-school property taxes rises from about $50,000 to $150,000 in 2027 and $250,000 in 2028, then adjusts for inflation. The school-tax exemption stays at $25,000 — school taxes are untouched. The annual cap on assessment increases for non-homestead property — rentals, second homes, commercial — drops from 10% to 5%. One deadline matters for anyone moving here: if you were not a Florida permanent resident on December 31, 2026, you keep the existing exemption until your fifth year of homestead. File homestead by March 1.

Run it on a real Jacksonville house. Duval County's total millage is about 17.86 mills — roughly 6.34 mills for schools and about 11.52 mills for everything else. On a $300,000 homesteaded home in Jacksonville, the 2026 property tax works out to $4,623.50 a year, or $385.29 a month: school tax on $275,000 of taxable value ($300,000 minus the $25,000 school exemption) plus non-school tax on $250,000 ($300,000 minus the $50,000 non-school exemption). In 2027, the non-school taxable value drops to $150,000 ($300,000 minus the $150,000 exemption). The bill becomes $3,471.50 a year, or $289.29 a month — $1,152 a year, $96 a month, less. In 2028, with the $250,000 exemption, the bill falls to $2,319.50 a year, or $193.29 a month — $2,304 a year, $192 a month, less than 2026. Put it in the payment: a $300,000 VA purchase with zero down is a $306,450 loan after the 2.15% funding fee. At the Freddie Mac average 30-year fixed rate of 7.11% for the week ended November 12, 2026, principal and interest is $2,061.51 a month. Add property tax and an estimated $225 a month of homeowner's insurance, and the full payment is about $2,671.80 a month on 2026 taxes — and about $2,575.80 a month on 2027 taxes. Same house, same loan, same rate: $96 a month less, because the exemption changed.

Two honest caveats: the results are unofficial until certified, and the Legislature still has to write the implementing details. And a lower tax bill is not a lower home price — do not buy a house assuming the savings exist until they show on your TRIM notice in August 2027 and your tax bill in November 2027.

Should I Itemize or Take the Standard Deduction Now?

With the 2027 standard deduction at $33,200 for a married couple, most Florida buyers will never itemize — and that is fine, because the standard deduction is the bigger number for them. A buyer itemizes only when mortgage interest plus property tax plus any other itemized deductions beat it.

On a $300,000 loan at 7.11%, first-year mortgage interest is about $21,234. Add the 2026 Duval property tax of $4,623.50 and the itemized total is $25,857.52 — well under the $33,200 standard deduction. The standard deduction wins by $7,342.48, and the SALT cap is irrelevant because the property tax alone never gets near it.

On a $600,000 loan, the picture flips. First-year interest is about $42,468, and the Duval property tax on a $600,000 homesteaded home is about $9,981.50. The itemized total is $52,449.55 — $19,249.55 over the standard deduction. At a 22% marginal rate, that is about $4,234.90 a year of tax savings, or about $352.91 a month. The line between the two outcomes is roughly a $450,000 to $500,000 loan, depending on the tax bill. If you are buying in that range, run both versions before you decide — and remember the mortgage interest deduction applies to acquisition debt up to $750,000, a cap the One Big Beautiful Bill Act made permanent.

For a retired couple, the $6,000 senior deduction — $12,000 when both spouses qualify — is worth about $120 a month in lower federal tax. On a fixed retirement income, that is payment room.

What About the SALT Cap?

You will see headlines about the SALT cap rising to $40,804 for 2027, up from $40,400 in 2026. The cap is set by statute — 26 U.S.C. §164(b)(7) — rising 1% a year through 2029, then snapping back to $10,000 in 2030. Here is the Jacksonville reality: Florida has no state income tax, so for most Florida buyers the SALT deduction is property tax and nothing else. A $300,000 home's property tax is about $4,624 — nowhere near a $40,804 cap. The numbers that move a Florida buyer's payment are the standard deduction, the four new deductions, and Amendment 3.

What Should You Do With This?

Do not wait for January to start the file. The 2027 numbers are published, the Amendment 3 math is computable today, and a preapproval run on today's numbers tells you your real price ceiling before the spring market moves. If you are self-employed, talk to your broker before your 2026 return is filed — the return you file in the spring is the income your lender uses all year, and the new deductions are the rare ones that cut your tax without cutting that income. If you are 65 or older, a tipped worker, or someone with real overtime hours, run the actual dollars: a server keeping $120 a month and a retired couple keeping $120 a month are both looking at real payment room, not a rounding error. And if you are buying in Duval County, price the home on the 2027 tax bill, not the 2026 one — and file homestead by March 1.

One more thing the headlines will not tell you. None of these changes raises the income on your application by a dollar — except the 25% gross-up on non-taxable income, which has been there all along and which most buyers never hear about. A tax cut puts cash in your pocket. A higher qualifying income puts a bigger house in reach. They are not the same thing, and a broker who confuses them will misprice your file. With 200 lenders to shop and the actual agency guidelines in front of us, one lender's reading of your income is never the last word.

Sources

• IRS News Release IR-2026-133, November 5, 2026 — tax year 2027 inflation adjustments (standard deduction, brackets, child tax credit, EITC); details in Revenue Procedure 2026-35. 2027 figures apply to returns filed in 2028.
• IRS News Release IR-2025-103, October 9, 2025 — tax year 2026 adjustments in Revenue Procedure 2025-32 (standard deduction $16,100 single / $32,200 joint; 2026 brackets).
• One Big Beautiful Bill Act, Public Law 119-21, signed July 4, 2025 — four temporary deductions (tips, overtime, car-loan interest, senior) for tax years 2025–2028; SALT cap 26 U.S.C. §164(b)(7) ($40,000 for 2025, $40,400 for 2026, $40,804 for 2027, reverting to $10,000 in 2030); mortgage interest acquisition-debt cap $750,000 made permanent.
• Fannie Mae Selling Guide B3-3.1-01 — base income is gross monthly income; non-taxable income grossed up 25% (Social Security 15% automatically non-taxable). B3-3.2 — self-employed borrowers underwritten on tax returns, net income.
• VA Lenders Handbook, Pamphlet 26-7, Chapter 4 — residual income and the 25% gross-up of non-taxable income.
• Freddie Mac Primary Mortgage Market Survey, week ended November 12, 2026 — 30-year fixed 7.11%, 15-year fixed 6.45%.
• Florida Amendment 3 — approved November 3, 2026, about 62% yes (61.98% in unofficial statewide results; certification pending); effective January 1, 2027; non-school homestead exemption $150,000 in 2027 and $250,000 in 2028; school exemption stays $25,000; non-homestead assessment cap 10% to 5%.
• Duval County millage, 2025–26 — about 17.86 mills total (about 6.34 school, about 11.52 non-school); standard homestead exemption about $50,000 (2026 inflation-adjusted total $51,411 under Amendment 5).

This post is general education about tax and mortgage rules, not tax advice. Tax situations vary by income, family size, and state — talk to a qualified tax professional before you act on any of it.

Our Take

The 2027 tax changes are a good news story with a trap inside it: the trap is believing a lower tax bill means a bigger loan. It does not — except for the gross-up on non-taxable income, which most buyers never hear about. What the changes do is put real cash back in specific people's pockets — $120 a month for a server, $120 a month for a retired couple, $96 a month off a Jacksonville tax bill in 2027 and $192 a month in 2028 — and cash in the pocket is what pays a mortgage, builds reserves, and covers closing costs. The buyers who win are the ones who run the actual dollars before they shop, file their returns with the purchase in mind, and get their file priced across 200 lenders instead of taking one bank's word for what they can afford.

Here's the question: which of the 2027 changes puts the most money back in your pocket — the bigger standard deduction, one of the four new deductions, the child tax credit, or Florida's Amendment 3? And if you are buying in 2027, have you run your file on the new numbers yet? Tell us in the comments.

Your Next Step

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Run your real numbers on the affordability calculator — plug in the payment, the 2027 tax bill, and your gross income, and see what price actually fits. Then bring the result to Douglas to price across 200 lenders.

Prefer to talk it through? Call Douglas direct: (904) 517-4049.

Douglas Wilkerson — NMLS #1680719
Mortgage Broker, Branch Manager
Direct: (904) 517-4049
[email protected] | [email protected]
1548 the Greens Way, Ste. 4, Jacksonville Beach, FL 32250

Freeman Douglas Corporation is a DBA of Edge Home Finance. This is not a promise to lend — all credit decisions are subject to approval. Douglas Wilkerson, NMLS #1680719 | Edge Home Finance, NMLS #891464. Verify licensing at nmlsconsumeraccess.org. Equal Housing Opportunity.