IRS announces 2027 tax brackets and higher standard deductions

The Internal Revenue Service has issued the 2027 tax brackets, increasing the income thresholds for each level by roughly 3.22% to 3.25% to account for inflation. The standard deduction for 2027 will rise to $16,600 for single filers and $33,200 for married couples filing jointly, representing a $500 increase for individuals and a $1,000 increase for married couples.

While the marginal tax rates remain unchanged, the higher deductions could reduce the tax bill for taxpayers whose income stays the same, saving $500 for single filers and $1,000 for married couples filing jointly. Most taxpayers are expected to claim the standard deduction rather than itemize.

"The child tax credit is increasing by $100 to $2,300," the IRS noted.

The cap on the state and local tax (SALT) deduction will stay the same, but a special 1% annual adjustment will raise the SALT deduction limit to $40,804 for 2027, according to Mark Luscombe, principal analyst with Wolters Kluwer Tax & Accounting.

Estate-tax exclusions will also be adjusted for inflation, moving from $15 million this year to $15.48 million in 2027. The annual gift-tax exclusion will increase by $1,000 per recipient, reaching $20,000.