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The IRS recently released updated tax brackets and deduction thresholds for tax year 2027, which will affect taxpayers next year.
Each year, the IRS adjusts the thresholds used for tax brackets and the various deductions available to taxpayers to account for inflation. The changes will apply to what taxpayers owe on income earned in tax year 2027, for which Americans will file returns in 2028.
“American individuals and businesses will receive increased tax benefits in the next tax year, from an increase in the standard deduction and the child tax credit for families to an increase in the amount that businesses can spend,” said Frank Bisignano, CEO of the IRS.
The standard deduction, claimed by the majority of taxpayers who do not itemize their returns, is expected to increase to $16,600 for single taxpayers in 2027; $33,200 for married couples filing jointly and $24,925 for heads of household.
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People review tax forms on a laptop. (iStock/iStock)
Adjustments have also been made to the IRS tax brackets in terms of income thresholds applicable at a given tax rate.
Here is an overview of the tax brackets and rates that will apply in 2027:
- 37% for income above $661,375 for individuals or $793,650 for married couples filing jointly;
- 35% for income above $264,550 for individuals or $529,100 for married couples filing jointly;
- 32% for income above $208,325 for individuals or $416,650 for married couples filing jointly;
- 24% for income above $109,125 for individuals or $218,250 for married couples filing jointly;
- 22% for income above $52,025 for individuals or $104,050 for married couples filing jointly;
- 12% for income above $12,800 for individuals or $25,600 for married couples filing jointly;
- 10% for income of $12,800 or less for individuals or $25,600 or less for married couples filing jointly.
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IRS CEO and Social Security Commissioner Frank Bisignano said the revisions would provide more support to Americans. (Tierney L. Cross)
The IRS also increased the maximum child tax credit amount to $2,300 in 2027, an increase of $100 from a year ago. The refundable credit amount also increased by $100 to $1,800.
The annual gift tax exclusion will increase to $20,000 in 2027, up from $19,000 for calendar year 2026. For gifts made to a spouse who is not a U.S. citizen, the limit increases to $201,000 in 2027, up from $194,000 a year ago.
The estate tax exclusion for estates of decedents who died in 2027 is a base exclusion of $15,480,000, an increase from the 2026 total of $15 million.
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President Donald Trump’s One Big Beautiful Bill Act was signed into law in 2025 and extended tax provisions that were set to expire while providing other tax relief. (Samuel Corum/Getty Images)
Eligible taxpayers who have three or more qualifying children and can claim the Earned Income Tax Credit (EITC) will see the maximum credit increase to $8,496 in 2027, up from $8,231 a year ago.
Credits for qualified adoption expenses are $18,250 in 2027, up from $17,670 last year. The amount of the credit refundable in 2027 is $5,280.
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