IRS Announces 2027 Inflation Adjustments for Federal Tax Brackets

The Internal Revenue Service announced inflation adjustments for nearly 70 tax provisions for the 2027 tax year, which will be reflected in returns filed in 2028. Based on a 3.2% inflation increase, the agency raised income thresholds for the seven progressive tax brackets to prevent taxpayers from being pushed into higher tiers as nominal incomes rise. The top marginal rate remains 37% for individuals earning over $661,375 and married couples filing jointly earning over $793,650.

Standard deductions will rise to $16,600 for single filers, $33,200 for married couples filing jointly, and $24,925 for heads of household. Other key updates include increasing the Child Tax Credit to a maximum of $2,300 and raising the federal estate tax exclusion to $15.48 million. The annual gift tax exclusion will increase to $20,000, and the maximum Earned Income Tax Credit for taxpayers with three or more children will rise to $8,496.

IRS Chief Executive Officer Frank J. Bisignano stated that these adjustments ensure taxpayers continue to benefit from the Working Families Tax Cuts. The updates follow the One Big Beautiful Bill Act signed by President Donald Trump in 2025, which extended several expiring provisions. While most brackets adjusted for inflation, certain breaks—including deductions for tip income, overtime pay, and a $6,000 senior bonus deduction—remain fixed and are scheduled to expire after the 2028 tax year unless the United States Congress extends them.