IRS Sets 2027 Standard Deduction at $33,200 for Joint Filers as Brackets Rise
The IRS on Thursday raised 2027 tax brackets and the standard deduction, giving most filers higher inflation-adjusted thresholds for returns filed in 2028.
Married couples filing jointly will see a standard deduction of $33,200, up $1,000 from the prior year, the IRS announced in IR-2026-133.
Single filers and married people filing separately will claim $16,600, while heads of household get $24,925.
The top 37% rate will apply to taxable income above $661,375 for singles and $793,650 for joint filers.
Other 2027 thresholds for singles, with joint figures in parentheses, are 35% above $264,550 ($529,100), 32% above $208,325 ($416,650) and 24% above $109,125 ($218,250), The Tax Adviser reported.
The 22% bracket starts above $52,025 for singles ($104,050 joint), the 12% bracket above $12,800 ($25,600), and the 10% rate covers income at or below those cutoffs.
Consumer prices rose 3.7% in the 12 months through September, the CPI reading that helps set the adjustments, CNBC noted.
The annual inflation update is designed to keep rising prices from pushing taxpayers into higher brackets, a process often called bracket creep.
Credits and Exclusions Also Rise
The maximum child tax credit will be $2,300, up $100, with the refundable portion rising $100 to $1,800, the IRS said.
The estate tax exclusion climbs to $15.48 million from $15 million, and the annual gift exclusion rises to $20,000 from $19,000.
Section 179 expensing jumps to $2.64 million, and the earned income tax credit for workers with three or more children reaches a maximum of $8,496.
IRS Chief Executive Officer Frank J. Bisignano said in the agency release, “Hardworking American taxpayers will continue to benefit from the Working Families Tax Cuts (WFTC) and will see WFTC credits and deductions increase with this adjustment.”
“American individuals and businesses will see increased tax benefits next tax year ranging from an increase in the standard deduction and the Child Tax Credit for families, and a boost to the amount that can be expensed by businesses,” Bisignano said.
The figures apply to tax year 2027, meaning most households will use them when they file returns in early 2028.
Employers, payroll systems and tax software typically begin updating withholding tables after the IRS publishes the annual revenue procedure.
For many middle-income households that do not itemize, the larger standard deduction is the biggest dollar change in the package.
Higher brackets also matter for dual-earner couples whose combined income sits near the 22% or 24% cliffs.
Business owners tracking Section 179 limits will see more room to expense qualifying equipment purchases in 2027 under the new cap.
The release keeps the familiar seven-rate structure while ratcheting each threshold higher to reflect measured inflation.
Filers should confirm final withholding and estimated-tax plans once payroll vendors load the official 2027 percentage-method tables.
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