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IRS shifts 2027 tax brackets. Will you owe less money?
USA Today • • general
Key Points:
- The IRS announced that all seven federal income tax brackets will increase their income thresholds for 2027 to adjust for inflation, while tax rates remain unchanged.
- Higher income thresholds mean taxpayers may earn more without moving into higher tax brackets, potentially reducing their overall tax burden when filing 2027 taxes in early 2028.
- The standard deduction is also increasing for 2027, rising to $33,200 for married couples filing jointly and $16,600 for single filers, benefiting about 90% of taxpayers who take the standard deduction.
- The lifetime gift and estate tax exemption is raised to $15.48 million per individual in 2027, allowing couples to transfer up to $30.96 million tax-free, though state death taxes may still apply.
- Taxable income is calculated after adjustments and deductions, and only the income within each bracket is taxed at that bracket's rate, reflecting the progressive nature of the U.S. tax system.
