Federal income tax brackets are expected to increase in 2027 because of inflation. This means Americans may be able to earn more money before some of their income moves into a higher tax bracket.
According to projections from Bloomberg Tax, tax brackets could increase by about 3.2% for 2027. These numbers are projections and have not yet been officially announced by the IRS.
Why Tax Brackets Change
The IRS adjusts federal tax brackets each year to account for inflation. These adjustments help prevent people from moving into a higher tax bracket simply because they received a cost-of-living raise.
The federal tax rates are expected to remain at 10%, 12%, 22%, 24%, 32%, 35%, and 37%. What changes is how much taxable income falls into each bracket.
Projected 2027 Tax Brackets
Here is how the 2026 tax brackets compare with the projected 2027 brackets.
Married Filing Jointly
| Tax Rate | 2026 Taxable Income | Projected 2027 Taxable Income |
|---|---|---|
| 10% | $0 – $24,800 | $0 – $25,600 |
| 12% | Over $24,800 – $100,800 | Over $25,600 – $104,050 |
| 22% | Over $100,800 – $211,400 | Over $104,050 – $218,250 |
| 24% | Over $211,400 – $403,550 | Over $218,250 – $416,650 |
| 32% | Over $403,550 – $512,450 | Over $416,650 – $529,100 |
| 35% | Over $512,450 – $768,700 | Over $529,100 – $793,650 |
| 37% | Over $768,700 | Over $793,650 |
Single Taxpayers
| Tax Rate | 2026 Taxable Income | Projected 2027 Taxable Income |
|---|---|---|
| 10% | $0 – $12,400 | $0 – $12,800 |
| 12% | Over $12,400 – $50,400 | Over $12,800 – $52,025 |
| 22% | Over $50,400 – $105,700 | Over $52,025 – $109,125 |
| 24% | Over $105,700 – $201,775 | Over $109,125 – $208,325 |
| 32% | Over $201,775 – $256,225 | Over $208,325 – $264,550 |
| 35% | Over $256,225 – $640,600 | Over $264,550 – $661,375 |
| 37% | Over $640,600 | Over $661,375 |
What Does This Mean for You?
The higher income limits could help some taxpayers by allowing more of their income to stay in a lower tax bracket.
It is also important to understand that reaching a higher tax bracket does not mean all of your income is taxed at that higher rate.
For example, if part of your income reaches the 22% bracket, only the portion that falls within that bracket is taxed at 22%. The income below it is taxed at the lower rates.
Standard Deduction Could Also Increase
The standard deduction is also projected to increase in 2027. For married couples filing jointly, the standard deduction is projected to increase from $31,500 in 2026 to $33,200 in 2027.
For single taxpayers, it is projected to increase from $15,750 to $16,600. A higher standard deduction can reduce the amount of your income that is subject to federal income tax.
The 2027 Numbers Are Not Official Yet
These numbers are currently projections from Bloomberg Tax. The IRS still needs to announce the official inflation-adjusted tax brackets and deductions for 2027.
The final numbers could be slightly different, so taxpayers should use these figures for general planning and wait for the official IRS announcement before making final tax decisions.
How Local Tax Can Help
Tax laws, deductions, and income limits can change from year to year. Local Tax can help you understand how these changes may affect you or your business.
Whether you need help with personal income taxes, business taxes, bookkeeping, or payroll services, Local Tax can help you stay organized, understand your tax responsibilities, and prepare your taxes correctly. Contact Local Tax today to get help preparing and planning for your taxes.
