2027 Federal Income Tax Brackets, Deductions, and Key Inflation-Adjusted Figures
The Internal Revenue Service (IRS) released the 2027 annual inflation adjustments for nearly 70 provisions, including tax brackets, standard deductions, and other changes. These adjustments generally apply to returns filed in 2028. The changes come under Revenue Procedure 2026-35 and are described in IRS News IR-2026-133. The broader context is the ongoing effect of inflation indexing and the One Big Beautiful Bill Act (OBBBA), which made permanent many TCJA provisions and introduced related changes that affect individuals and businesses in 2027.
2027 Federal Income Tax Brackets and Rates
For 2027, seven ordinary income tax brackets remain in place, with the top rate unchanged at 37%. The 2027 thresholds are indexed for inflation, so the income levels that trigger each bracket are higher than in 2026. The top marginal rate applies only to the portion of income that falls within the highest bracket, not to all of your income.
| Tax Rate | Single Filers | Married Filing Jointly | Heads of Households |
|---|---|---|---|
| 10% | $0 to $12,800 | $0 to $25,600 | $0 to $18,250 |
| 12% | $12,801 to $52,025 | $25,601 to $104,050 | $18,251 to $69,650 |
| 22% | $52,026 to $109,125 | $104,051 to $218,250 | $69,651 to $109,100 |
| 24% | $109,126 to $208,325 | $218,251 to $416,650 | $109,101 to $208,300 |
| 32% | $208,326 to $264,550 | $416,651 to $529,100 | $208,301 to $264,550 |
| 35% | $264,551 to $661,375 | $529,101 to $793,650 | $264,551 to $661,350 |
| 37% | $661,376 or more | $793,651 or more | $661,351 or more |
Note: The thresholds above apply to taxable income after deductions and exemptions. They are designed to reflect inflation and the broader fiscal framework set by the 2027 adjustments.
2027 Standard Deduction, Personal Exemption, and Senior Deduction
The standard deduction for 2027 is set at:
| Filing Status | Deduction Amount |
|---|---|
| Single | $16,600 |
| Married Filing Jointly | $33,200 |
| Head of Household | $24,925 |
There are several additional considerations for seniors. Seniors aged 65 and older may claim an extra standard deduction of $2,100 for single filers and $1,700 for joint filers. In addition, a separate senior deduction under the OBBA allows a $6,000 deduction per qualifying taxpayer, but it phases out at a 6% rate for those earning over $75,000 (single) or $150,000 (joint). This senior deduction is not indexed for inflation and expires at the end of 2028. The personal exemption remains $0, a permanent change enacted by the TCJA and made permanent under the OBBA, with the senior deduction not included in that zero-exemption context.
2027 Alternative Minimum Tax (AMT)
The AMT continues as a parallel tax system with exemptions and two rates. For 2027, the AMT exemption is $93,000 for unmarried individuals and $144,700 for married couples filing jointly. The 28% AMT rate applies to AMT excess taxable income above $252,500 for all taxpayers (the $126,250 figure is applicable for married individuals filing separately).
| Item | Filing Status | Amount |
|---|---|---|
| AMT Exemption | Unmarried Individuals | $93,000 |
| AMT Exemption | Married Filing Jointly | $144,700 |
| AMT Rate | All taxpayers | 28% on AMT excess over threshold |
| AMT Threshold for 28% rate | All taxpayers | $252,500 (AMT excess income) |
AMT exemption phaseout thresholds are $515,950 for single filers and $1,031,900 for married filing jointly. The phaseout is 50 cents for every dollar of AMTI over these thresholds. These thresholds align with the 2018 level structure returning under OBBA, and the 28% rate applies to AMT income above the stated amount.
2027 Earned Income Tax Credit (EITC) and Child Tax Credit (CTC)
The EITC maximums for 2027 vary by filing status and the number of qualifying children. For single or head of household filers, the maximum credits are $685 with no children, $4,573 with one child, $7,552 with two children, and $8,496 with three or more children. For married couples filing jointly, the corresponding values match the same structure and are shown in the detailed table below. The income thresholds at which the maximum credit is earned and the phaseout ranges increase with inflation, affecting eligibility across categories.
| Filing Status | No Children (Maximum Credit) | One Child (Maximum Credit) | Two Children (Maximum Credit) | Three or More Children (Maximum Credit) |
|---|---|---|---|---|
| Single or Head of Household | $685 | $4,573 | $7,552 | $8,496 |
| Married Filing Jointly | $685 | $4,573 | $7,552 | $8,496 |
The 2027 Child Tax Credit (CTC) maximum remains $2,300 per qualifying child, with the refundable portion increased to $1,800 for 2027. The CTC is indexed for inflation each year.
Education Credits: Lifetime Learning Credit (LLC) and MAGI Phaseouts
The Lifetime Learning Credit is phased out for taxpayers with MAGI within a defined range. For 2027, the phaseout begins at a MAGI of $80,000 and ends at $90,000 for single filers, with the corresponding range for joint filers at $160,000 to $180,000. These phaseout thresholds are not indexed for inflation, as noted in IRS guidance.
Planners should consider these education credits when budgeting for higher education expenses. The phaseouts can affect eligibility even as education costs rise, so it’s important to compare MAGI against the specified thresholds for 2027.
Other Notable 2027 Adjustments
A number of other inflation-adjusted items and policy changes affect planning in 2027. Highlights include:
- Foreign Earned Income Exclusion increases to $137,300 for 2027 (up from $132,900 in 2026).
- Section 179 expensing limit rises to $2,640,000; the per-vehicle limit for SUVs is $33,100 in 2027 (up from $32,000 in 2026).
- Adoption credits: maximum credit up to $18,250, with up to $5,280 refundable.
- Employer-Provided Childcare Tax Credit: maximum credit rises to $515,943.67; $619,132.40 for eligible small businesses.
- Health Flexible Spending Arrangements (FSAs): elective deferrals up to $3,500; carryover maximum $700.
- Estate and Gift tax: lifetime exemption for estates rises to $15,480,000; annual gift exclusion increases to $20,000 per recipient (spouse-to-spouse gift exclusion for non-citizen spouses remains $201,000).
- Personal exemptions remain $0.
Other related changes and thresholds are indexed in IRS guidance and Tax Foundation analyses; readers planning mid-cycle decisions should review the details in Revenue Procedure 2026-35 and IR-2026-133 for the official numbers and definitions.
Practical Planning Implications for 2027
With higher thresholds and expanded credits in 2027, it makes sense to revisit your year-end strategy. Consider accelerating or delaying income and deductions to stay within favorable brackets. For example, pre-tax retirement contributions reduce taxable income and can be especially valuable when you’re near a bracket boundary. Roth conversions can be advantageous in years when income sits near the edge of a bracket, potentially enabling tax-free withdrawals later in retirement. Health savings account (HSA) contributions also reduce taxable income when you have a qualifying high-deductible plan.
Other practical moves include using a flexible approach to itemized deductions (SALT, charitable giving) and evaluating the timing of income or deductions that can influence bracket placement. For business owners, note that the Section 179 SUV limit applies to vehicles above 6,000 pounds gross vehicle weight rating and is subject to business-use rules. Fringe benefits, including qualified transportation and parking, now carry a $350 monthly limit for 2027, a change to plan pre-tax contributions accordingly.
Common Mistakes and Quick References
One frequent misunderstanding is that crossing into a higher bracket means your entire income is taxed at the higher rate. In reality, only the portion of income that falls into the new bracket is taxed at the higher rate. The effective tax rate will depend on credits, deductions, and how income is earned across the year.
Readers should also note that indexing changes apply to the 2027 year and are reflected on 2028 tax returns. The personal exemption remains $0, and the standard deduction amounts are as noted above. For education credits, the Lifetime Learning Credit phaseout thresholds apply at MAGI levels that are not indexed for inflation. Fringe benefits, AMT parameters, and other items have their own phaseouts and thresholds that affect planning when income is high or when certain credits begin to phase out.
FAQ Highlights
What is my marginal rate? The marginal rate is the rate applied to your last dollar of income within the bracket that contains that income, not a blanket rate on all earnings. What is my effective tax rate? It is the total taxes due divided by total income, reflecting credits, deductions, and the mix of taxable income across brackets.
Source and Validation
Numbers and programmatic guidance come from IRS IR-2026-133 and Revenue Procedure 2026-35. The figures reflect inflation adjustments for tax year 2027, applicable to returns filed in 2028. Always verify with the official IRS publications and consult a tax professional for personalized planning.