- The standard deduction will rise to $16,600 for single filers and $33,200 for married couples filing jointly.
- The top 37% tax rate will apply to taxable income above $661,375 for individuals and $793,650 for joint filers.
- The maximum child tax credit will increase by $100 to $2,300 per qualifying child.
The Internal Revenue Service (IRS) has announced higher federal income tax brackets and standard deductions for 2027, giving American taxpayers more income to shield from federal income tax as the agency adjusts the thresholds for inflation.
The changes cover nearly 70 tax provisions, including income tax rates, deductions and credits. They apply to income earned during the 2027 calendar year, meaning most taxpayers will use the new figures when filing their returns in 2028. They will not affect the tax returns Americans are preparing for the current filing season.
The standard deduction will increase to $16,600 for single taxpayers, up from $16,100 in 2026. Married couples filing jointly will be able to claim $33,200, compared with $32,200 this year. For heads of households, the deduction will rise to $24,925 from $24,150.
For single taxpayers and married couples filing jointly, the increase means an additional $500 per person in income can be excluded from federal income tax through the standard deduction.
The maximum child tax credit will also rise by $100 to $2,300 per qualifying child. The maximum refundable portion will increase to $1,800.
The adjustments come as households continue to face pressure from higher living costs. Annual consumer price inflation reached 3.7% in September 2026, according to the Bureau of Labor Statistics, adding to concerns about the cost of housing, groceries, fuel and other essentials.
How will the new tax brackets work?
The US federal income tax system is progressive, meaning different portions of a person's taxable income are taxed at different rates. Moving into a higher tax bracket does not mean all earnings are taxed at that higher rate.
For the 2027 tax year, the seven federal income tax rates will remain unchanged, ranging from 10% to 37%. What changes are the income thresholds at which each rate applies.
For single taxpayers, the 10% rate will apply to taxable income up to $12,800. The 12% rate will apply to income above $12,800, while the 22% rate will begin above $52,025. The 24% bracket starts above $109,125, followed by 32% above $208,325 and 35% above $264,550.
The highest rate of 37% will apply to taxable income above $661,375.
For married couples filing jointly, the corresponding thresholds are higher. The 10% rate will apply up to $25,600, with the 12% bracket starting above that level. The 22% rate begins above $104,050, the 24% rate above $218,250, the 32% rate above $416,650 and the 35% rate above $529,100. The top 37% rate applies above $793,650.
These thresholds are based on taxable income, which is generally calculated after subtracting the applicable deduction from adjusted gross income. Taxpayers can claim the standard deduction or itemise eligible deductions, depending on which is more beneficial.
The IRS adjusts these income thresholds annually to account for inflation. The aim is to prevent rising nominal wages from pushing taxpayers into higher brackets when their purchasing power has not necessarily increased.
The filing status selected on a tax return also matters. The main categories include single, married filing jointly, married filing separately, head of household and qualifying surviving spouse.
What other tax changes should families know about?
The higher standard deduction and child tax credit are among the most relevant changes for households, but the IRS has also adjusted several other provisions.
The federal estate tax exclusion will increase to $15.48 million for estates of people who die in 2027, up from $15 million in 2026. The annual gift tax exclusion will rise from $19,000 to $20,000 per recipient.
The maximum earned income tax credit for qualifying taxpayers with three or more children will increase to $8,496, compared with $8,231 for 2026. The foreign earned income exclusion will also rise, reaching $137,300 for 2027.
For investors, the IRS has adjusted long-term capital gains thresholds as part of its annual inflation update. These determine the income levels at which different capital gains tax rates apply.
The changes are part of the annual adjustments under Revenue Procedure 2026-35. The IRS said taxpayers would continue to benefit from provisions in the Working Families Tax Cuts, the administration's name for the tax legislation enacted in 2025.
The higher thresholds could reduce the tax burden for some people whose incomes remain unchanged, but the actual benefit will depend on their earnings, filing status, deductions and eligibility for credits. An increase in the standard deduction does not automatically mean every taxpayer will pay less.
For households planning their finances, the distinction between the 2026 and 2027 tax years is important. The new figures apply to income earned from January 1, 2027, and will be used when returns are filed in 2028. Income earned during 2026 will still be assessed under the 2026 tax rules.
