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IRS Raises 2027 Tax Brackets to Offset Inflation, Standard Deduction Also Increases
The IRS announced higher income thresholds for all seven federal tax brackets in 2027, a routine inflation adjustment meant to prevent workers from being pushed into higher rates as wages rise. The lowest rate now applies to single filers earning up to $12,800, while the top 37% rate kicks in above $661,375.
The Internal Revenue Service has announced its annual inflation adjustment to federal income tax brackets for tax year 2027, raising the income thresholds at every level so that workers whose wages rise with the cost of living are not automatically pushed into a higher tax rate.
The tax rates themselves remain unchanged, ranging from 10% to 37%. What shifts are the income levels at which each rate begins.
Under the new schedule, single filers earning $12,800 or less â and married couples filing jointly earning $25,600 or less â fall into the 10% bracket. The 12% rate applies to income above those amounts, followed by 22% on income over $52,025 for single filers ($104,050 for joint filers), 24% over $109,125 ($218,250), 32% over $208,325 ($416,650), and 35% over $264,550 ($529,100).
The top rate of 37% applies to single filers earning more than $661,375 and married couples filing jointly earning more than $793,650.
The adjustment is designed to account for inflation, ensuring that households are not taxed at higher rates simply because their paychecks grew while their purchasing power stayed flat. The announcement comes as many families continue to grapple with elevated costs for housing, groceries, gasoline and other everyday expenses â a squeeze that makes the difference between marginal tax rates a practical concern for household budgets.
Because the federal income tax system is progressive, taxpayers do not pay a single rate on all of their income. Instead, income is taxed in layers, with each portion of earnings taxed at the rate for the bracket it falls into. A raise that moves a worker into a higher bracket therefore does not reduce their take-home pay; only the income above the threshold is taxed at the higher rate.
The IRS typically releases the updated brackets, standard deduction and other inflation-adjusted figures each fall, giving taxpayers and employers time to prepare for the coming filing season.