IRS Announces 2027 Tax Brackets and Standard Deduction Increases

The IRS announced new federal income tax brackets and standard deductions for tax year 2027 on Thursday, November 5, 2026. The adjustments apply to income earned in 2027 and to tax returns filed in 2028.

New tax brackets for 2027

The IRS raised the income thresholds for all seven federal tax brackets, which range from 10% to 37%. The rates themselves remain unchanged.

For single filers, the top 37% rate applies to taxable income above $661,375. For married couples filing jointly, the top rate applies to income of $793,650 or more.

The 10% bracket covers single filers with income from $0 to $12,800 and married couples filing jointly with income from $0 to $25,600.

Standard deduction increases

The standard deduction will rise to $33,200 for married couples filing jointly, up from $32,200 in 2026. Single filers can claim $16,600, up from $16,100. Heads of household can take $24,925, up from $24,150.

Other 2027 changes

The IRS also adjusted several other tax provisions for 2027:

• The child tax credit increases to $2,300 per child, up from $2,200 in 2026. Up to $1,800 is refundable.
• The maximum earned income tax credit for taxpayers with three or more qualifying children rises to $8,496, up from $8,231.
• The annual gift tax exclusion increases to $20,000 per person, up from $19,000.
• The lifetime estate tax exclusion rises to $15,480,000, up from $15,000,000.
• Health flexible spending account contributions can reach $3,500, with up to $700 carryover if the plan permits.
• Health savings account contribution limits rise to $4,500 for self-only coverage and $9,000 for family coverage.

The IRS said the inflation adjustments are designed to prevent "bracket creep," where taxpayers who receive a cost-of-living raise pay more in taxes even though their purchasing power remains unchanged. The Bureau of Labor Statistics reported that the consumer price index climbed 3.7% in September 2026 from one year earlier, up from a yearly pace of 3.4% in August.

Why it matters

The bracket and deduction changes mean some taxpayers may owe less in 2027 than they would have under 2026 rules at the same income. For example, a married couple earning $120,000 with two children would owe $336 less in federal tax in 2027, according to calculations using the standard deduction and child tax credit. A single filer earning $60,000 would save $68, and a single filer earning $100,000 would save $280.

Taxpayers should note that the return due in April 2027 still uses the 2026 tax brackets and standard deduction. The new 2027 figures apply to income earned from January 1 through December 31, 2027.

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Sources

• cnbc.com: 2027 tax brackets and federal income tax rates
• nerdwallet.com: IRS Announces 2027 Income Tax Brackets, Updated Standard Deduction - NerdWallet
• thecollegeinvestor.com: 2027 Tax Brackets And Standard Deduction From The IRS
• money.com: New IRS Tax Brackets for 2027: Shield More Income From Taxes | Money
• demokratis.co.id: IRS Raises 2027 Tax Brackets and Standard Deductions

This article was drafted with AI assistance and checked against the sources above. Company claims are reported as claims. Cover image is AI-generated.