Each year, the IRS updates common tax provisions, such as income tax brackets and the standard deduction, to ensure the tax code is keeping pace with the rising cost of living.
These tweaks — formally known as inflation adjustments — help prevent “bracket creep,” where taxpayers who received a cost-of-living raise can pay more in taxes even though their purchasing power remains unchanged.
Inflation adjustments for the 2027 tax year were set at 3.2% — larger than the previous two years as inflation heated up. This could mean lower tax bills for some people when they file in 2028.
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Federal tax brackets and tax rates
In the U.S., there are seven marginal rates — 10%, 12%, 22%, 24%, 32%, 35% and 37% — which will remain unchanged for 2027.
Contrary to a popular myth, it’s uncommon for people to pay a single flat federal tax rate on their taxable income. Instead, portions of a person’s income can be taxed at different rates depending on which tax brackets they fall into. For example, some of a person’s income could be taxed at 10%, another chunk at 12%, and so on.
For 2027, the IRS is adjusting those tax brackets — the windows of income that dictate where a tax rate ends and begins — for each filing status. The adjustments mean that some people may be able to keep some of their income in lower tax brackets, and those who received a cost-of-living raise may avoid getting a portion of their income pushed into a higher bracket.
Married filers, for example, can make up to $104,050 to remain with a top tax rate of 12%, compared with $100,800 in 2026. This increase could allow some couples to shelter an additional $3,250 from a higher tax rate in 2027.
2026 vs. 2027 tax brackets: Married filing jointly
Tax rate | 2026 | 2027 |
|---|---|---|
10% | $0 to $24,800 | $0 to $25,600 |
12% | $24,801 to $100,800 | $25,601 to $104,050 |
22% | $100,801 to $211,400 | $104,051 to $218,250 |
24% | $211,401 to $403,550 | $218,251 to $416,650 |
32% | $403,551 to $512,450 | $416,651 to $529,100 |
35% | $512,451 to $768,700 | $529,101 to $793,650 |
37% | $768,701 or more | $793,651 or more |
2026 vs. 2027 tax brackets: Single filers
Tax rate | 2026 | 2027 |
|---|---|---|
10% | $0 to $12,400 | $0 to $12,800 |
12% | $12,401 to $50,400 | $12,801 to $52,025 |
22% | $50,401 to $105,700 | $52,026 to $109,125 |
24% | $105,701 to $201,775 | $109,126 to $208,325 |
32% | $201,776 to $256,225 | $208,326 to $264,550 |
35% | $256,226 to $640,600 | $264,551 to $661,375 |
37% | $640,601 or more | $661,376 or more |
2026 vs. 2027 tax brackets: Heads of household
Tax rate | 2026 | 2027 |
|---|---|---|
10% | $0 to $17,700 | $0 to $18,250 |
12% | $17,701 to $67,450 | $18,251 to $69,650 |
22% | $67,451 to $105,700 | $69,651 to $109,100 |
24% | $105,701 to $201,750 | $109,101 to $208,300 |
32% | $201,751 to $256,200 | $208,301 to $264,550 |
35% | $256,201 to $640,600 | $264,551 to $661,350 |
37% | $640,601 or more | $661,351 or more |
2026 vs. 2027 tax brackets: Married filing separately
Tax rate | 2026 | 2027 |
|---|---|---|
10% | $0 to $12,400 | $0 to $12,800 |
12% | $12,401 to $50,400 | $12,801 to $52,025 |
22% | $50,401 to $105,700 | $52,026 to $109,125 |
24% | $105,701 to $201,775 | $109,126 to $208,325 |
32% | $201,776 to $256,225 | $208,326 to $264,550 |
35% | $256,226 to $384,350 | $264,551 to $396,825 |
37% | $384,351 or more | $396,826 or more |
Standard deduction
The IRS lets most filers lower their taxable income by taking the standard deduction or itemizing their returns. The standard deduction, a flat amount based on filing status and age, is popular, as it requires less work to claim and is often more beneficial for those who might not have deductible expenses.
For 2027, the standard deduction will be $16,600 for single filers and those married filing separately, a $500 increase from 2026. Joint filers will be eligible to take $33,200 and heads of household can take $24,925, a $1,000 and $775 increase over 2026, respectively.
Filing status | 2026 | 2027 |
|---|---|---|
Married filing jointly | $32,200 | $33,200 |
Single | $16,100 | $16,600 |
Head of household | $24,150 | $24,925 |
Married filing separately | $16,100 | $16,600 |
» Need help deciding whether to itemize or take the standard deduction? Learn about the differences
on Anthem Tax Services' website
on TaxRise's website
on Anthem Tax Services' website
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What else will change for taxes in 2027?
Also included in the IRS' 32-page inflation release are various updates to several tax provisions beyond the federal tax brackets. Plus, a brand-new tax credit will go into effect in 2027.
HSAs and FSAs
Starting in 2027, taxpayers who contribute to a health flexible spending account (FSA) can contribute up to $3,500 and, if their plan permits, carry over up to $700 into the next tax year.
For those with health savings accounts, the 2027 limit for contributions will rise to $4,500 for self-only coverage and $9,000 for family coverage.
Gift tax exclusion
The annual exclusion for gifts, which limits how much taxpayers can give an individual without filing a gift tax return on certain gifts, will be $20,000 per person in 2027, an increase of $1,000 compared with 2026.
Estate tax exclusion
The lifetime estate tax exclusion establishes a threshold for the taxation of estates upon a person's death. In 2027, estates valued at or below $15.48 million will not be subject to estate tax, up from $15 million in 2026.
Education Freedom Tax Credit
The Education Freedom Tax Credit will launch on Jan. 1. According to the IRS, it aims to support private contributions for K-12 scholarships. Taxpayers who donate to a "scholarship granting organization" in one of the 30 participating states can receive a nonrefundable tax credit of up to $1,700 ($3,400 for couples filing jointly).
