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The IRS revealed higher capital gains tax brackets for 2027.
In its announcement Thursday, the agency increased taxable income limits for long-term capital gains brackets, which apply to assets held for more than a year.
It also increased the numbers on dozens of other provisions, including federal income tax brackets, estate and gift tax exemption, and eligibility for the Earned Income Tax Credit, among others.
Despite stock market volatility after the election, many long-term investors hold profitable assets after years of market growth.
The new capital gains tranches could impact investors’ sales or rebalancing plans for 2027, which may trigger taxes on investments in brokerage accounts.
How capital gains brackets work
The capital gains rate you pay – 0%, 15% or 20% – depends on which bracket you fall into based on taxable income.
You calculate taxable income by subtracting the greater of the standard or itemized deductions from your adjusted gross income.
For 2027, the standard deduction will increase to $16,600 for single filers, up from $16,100, and to $33,200 for married couples filing jointly, up from $32,200.
Starting in 2027, single filers with taxable income of $51,050 or less and married couples filing jointly with $102,100 or less will qualify for the 0% long-term capital gains rate.
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