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The IRS has announced new federal income tax brackets and standard deductions for 2027.
In Thursday’s announcement, the agency increased the income thresholds for each category for the 2027 tax year on returns filed in 2028.
The IRS also increased numbers for other important provisions, including long-term capital gains limits, estate and gift tax exemptions, and eligibility for the earned income tax credit.
In 2027, the top tax rate of 37% will apply to individuals with taxable income of more than $661,375 and married couples filing jointly with income of more than $793,650.
The 2027 federal income tax brackets are:
37%: If your income exceeds $661,375 ($793,650 if a married couple files jointly) 35%: If your income exceeds $264,550 ($529,100 if a married couple files jointly) 32%: If your income exceeds $208,325 ($416,650 if a married couple files jointly) 24%: If your income is more than $109,125 ($218,250 for a married couple filing jointly)22%: If your income is more than $52,025 ($104,050 for a married couple filing jointly)12%: If your income is more than $12,800 ($25,600 for a married couple filing jointly)10%: If your income is $12,800 or less ($25,600 for married couples filing jointly)
Federal income tax brackets indicate how much you owe on each portion of your taxable income. It is calculated by subtracting the greater of your standard deduction or itemized deductions from your adjusted gross income.
The standard deduction will also increase in 2027, increasing from $32,200 in 2026 to $33,200 for married couples filing jointly. Starting in 2027, single filers will be able to claim $16,600, up from $16,100.
The new tax comes as Americans grapple with affordability issues as housing, food, gasoline and other living costs soar.
The Bureau of Labor Statistics announced in October that the consumer price index for September 2026 was up 3.7% year over year, up from the annual pace of 3.4% in August.
How tax classification works
The U.S. federal income tax system is progressive, meaning that as your earnings increase, so do your tax rates.
The 2027 federal classification includes seven income brackets, with tax rates ranging from 10% to 37%. Tax rates are applied to each income band, rather than being a flat percentage of all income.
The IRS annually adjusts the income range for each tax rate based on the Consumer Price Index.
How to know your tax bracket
Your federal tax bracket depends on the filing status you choose on your tax return. Options include single person, married person filing jointly, married couple filing separately, head of household or eligible surviving spouse.
Taxable income for 2025 is listed on line 15 of an individual’s federal income tax return, known as Form 1040.
