The Internal Revenue Service announced inflation adjustments for the 2027 tax year, raising federal income tax bracket thresholds and standard deductions while maintaining the seven marginal rates from 10% to 37%.
The highest bracket begins above $661,375 of taxable income for single filers and $793,650 for married couples filing jointly. The standard deduction increases to $16,600 for single filers, $33,200 for joint filers and $24,925 for heads of household. The revised thresholds apply to income earned in 2027 and returns generally filed in 2028.
The seven ordinary income tax rates remain 10%, 12%, 22%, 24%, 32%, 35% and 37%, but the income thresholds will be higher to account for inflation. The top rate begins above $661,375 for single filers and $793,650 for married couples filing jointly.
The new amounts apply to income earned in 2027, with returns generally filed during 2028. Taxpayers preparing returns for the 2026 tax year will continue using that year’s separate brackets and deductions.
For single filers, the 10% bracket extends through $12,800, the 12% bracket through $52,025, the 22% bracket through $109,125, the 24% bracket through $208,325, the 32% bracket through $264,550 and the 35% bracket through $661,375.
For married couples filing jointly, the corresponding thresholds are $25,600, $104,050, $218,250, $416,650, $529,100 and $793,650. Income exceeding the last threshold is taxed at the top marginal rate.
The standard deduction rises to $16,600 for single filers, $33,200 for joint filers and $24,925 for heads of household. Those deductions reduce the amount of income subject to federal income taxes for taxpayers who do not itemize.
Tax brackets operate progressively. A single filer with $40,000 in taxable income would pay 10% on the first $12,800 and 12% on the remainder, for $4,544 before credits. The effective income tax rate on that taxable income would be 11.36%.
The federal child tax credit increases to as much as $2,300 per eligible child younger than 17, with a refundable portion of up to $1,800 for qualifying families. The annual inflation adjustments also affect other credits and exclusions.
The federal estate tax exemption will increase, and taxpayers can plan around higher annual gift exclusions and certain business tax provisions. Deductions for qualifying retirement contributions, health savings accounts and eligible expenses can further reduce taxable income.
The IRS adjusts tax thresholds to limit bracket creep, which occurs when inflation-driven wage increases push taxpayers into higher nominal brackets without a corresponding increase in purchasing power.
The federal income tax system is progressive: entering a higher bracket does not subject all earnings to that higher rate. Taxpayers can reduce liability through eligible deductions, retirement contributions and credits. The changes also include increased thresholds for certain family, estate and business tax provisions.
