IRS Raises 2027 Federal Tax Bracket Thresholds and Standard Deduction

The Internal Revenue Service (IRS) has moved the income cutoffs for all seven federal income tax brackets for tax year 2027, setting new levels for the portions of taxable income taxed at each rate before returns are filed in 2028.

The highest rate is 37%, and its starting point depends on filing status. For single filers, that rate applies to taxable income above $661,375; for married couples filing jointly, it applies at $793,650 or more. These figures refer to income after deductions, rather than total earnings before deductions.

The schedule contains seven income tiers, with rates ranging from 10% through 37%. In this progressive structure, each percentage applies only to dollars in its assigned band. When taxable income reaches a higher tier, the higher rate affects income in that tier while amounts in lower bands retain their lower rates. The 37% rate applies only to taxable income above the top cutoff; income in lower brackets retains its lower rates.

An income bracket is a range tied to a tax rate, rather than a rate applied to a person’s entire income. When taxable income spans multiple ranges, the amounts in those ranges are taxed at their respective rates. Federal filing categories include single, married filing jointly, married filing separately, head of household and qualifying surviving spouse. The applicable bracket schedule depends on the category used on a return.

The standard deduction will increase to $33,200 for joint filers in 2027, from $32,200 in 2026. For single filers, it will be $16,600, compared with $16,100 the prior year. Taxable income is calculated by taking the larger of the standard deduction or itemized deductions away from adjusted gross income. Bracket thresholds should therefore be compared with taxable income after the deduction calculation, rather than with an unadjusted income total.

The IRS resets bracket ranges each year based on changes in the Consumer Price Index. The index was 3.7% higher in September 2026 than a year earlier, compared with a 3.4% annual increase in August 2026.

The annual update also covers long-term capital-gains brackets and the estate and gift tax exemption. It includes changes to eligibility for the earned income tax credit as well.