IRS Announces Higher 2027 Tax Brackets, Raises Standard Deduction by $500 for Single Filers

The Internal Revenue Service increased federal income tax thresholds and deductions for 2027, allowing individuals and married couples to shield more income from taxation while maintaining the existing seven tax rates.

By yourNEWS Media Newsroom

WASHINGTON — The Internal Revenue Service announced new federal income tax brackets and inflation adjustments Thursday, Nov. 5, increasing the standard deduction to $16,600 for single taxpayers and $33,200 for married couples filing jointly for tax year 2027.

The changes, detailed in the IRS’s official announcement, affect nearly 70 federal tax provisions, including income tax brackets, the child tax credit, estate and gift tax exemptions, and the earned income tax credit.

The adjustments apply to income earned during 2027, with most taxpayers reporting that income on returns filed in 2028. They do not apply to 2026 income reported during the upcoming 2027 filing season.

The standard deduction for single taxpayers and married individuals filing separately will rise by $500, from $16,100 in 2026 to $16,600 in 2027.

Married couples filing jointly will receive a $1,000 increase, bringing their standard deduction to $33,200. The deduction for heads of household will increase to $24,925, up from $24,150.

The standard deduction reduces the amount of income subject to federal income tax for taxpayers who do not itemize deductions.

Federal income tax rates will remain unchanged at 10%, 12%, 22%, 24%, 32%, 35% and 37%, but the income thresholds for each bracket will increase to account for inflation.

For single filers, the 2027 federal income tax brackets are:

For married couples filing jointly, the 10% bracket will apply to taxable income up to $25,600, while the 12% bracket will extend to $104,050.

The 22% rate will apply to income above $104,050 through $218,250, followed by the 24% rate through $416,650 and the 32% rate through $529,100.

The 35% bracket will cover income above $529,100 through $793,650, with the top 37% rate applying to taxable income exceeding $793,650.

The higher thresholds are intended to limit bracket creep, which occurs when inflation-driven wage increases push taxpayers into higher tax brackets even though their purchasing power has not necessarily improved.

Under the progressive federal income tax system, reaching a higher bracket does not mean all income is taxed at that rate. Only the portion above the applicable threshold is subject to the higher marginal rate.

The IRS also announced increases in several tax credits and exemptions under provisions associated with the Working Families Tax Cuts legislation.

The maximum child tax credit will increase by $100 to $2,300 per qualifying child in 2027. The maximum refundable portion will also increase by $100 to $1,800, subject to eligibility requirements.

The earned income tax credit for qualifying taxpayers with three or more children will rise to a maximum of $8,496.

Estate and gift tax provisions will also receive inflation adjustments.

The federal estate tax exclusion will increase from $15 million in 2026 to $15.48 million in 2027, allowing larger estates to pass to heirs without triggering federal estate tax, subject to applicable rules.

The annual gift tax exclusion will increase from $19,000 to $20,000 per recipient.

For taxpayers subject to the alternative minimum tax, the exemption will rise to $93,000 for unmarried individuals and $144,700 for married couples filing jointly.

The maximum monthly exclusion for qualified transportation and parking benefits will increase to $350, while the foreign earned income exclusion will rise to $137,300.

IRS Chief Executive Officer Frank J. Bisignano said the changes would provide additional benefits to taxpayers and businesses.

“Hardworking American taxpayers will continue to benefit from the Working Families Tax Cuts (WFTC) and will see WFTC credits and deductions increase with this adjustment,” Bisignano said.

“American individuals and businesses will see increased tax benefits next tax year ranging from an increase in the standard deduction and the Child Tax Credit for families, and a boost to the amount that can be expensed by businesses.”

The adjustments were established under Revenue Procedure 2026-35, which provides the inflation-adjusted amounts for numerous provisions of the Internal Revenue Code.

According to KPMG’s analysis of the updated thresholds, the personal exemption will remain at zero in 2027, consistent with changes made permanent under the Working Families Tax Cuts legislation.

A separate limitation on the tax benefit of itemized deductions continues to apply to certain taxpayers in the highest income tax bracket.

The new thresholds generally provide modest tax relief by allowing more income to remain within lower brackets and increasing deductions that reduce taxable income.

However, the effect on individual taxpayers will vary depending on filing status, income, dependents, available credits and other deductions.

The IRS’s November 5 announcement establishes the inflation-adjusted figures under federal tax law as it currently stands. Subsequent legislative changes could affect provisions before the 2027 tax year begins.

For most taxpayers, the immediate distinction is that the higher brackets and deductions apply to income earned in 2027, not the federal tax returns they will file in the spring of 2027.