US raises 2027 tax brackets, standard deductions

The United States Internal Revenue Service has announced higher federal income tax brackets and standard deductions for 2027, adjusting the income thresholds to account for inflation.

The changes, announced on Thursday, November 5, 2026, will apply to the 2027 tax year, with taxpayers filing their returns in 2028, according to a report by CNBC.

“Under the new rates, the top federal income tax rate of 37 per cent will apply to individuals earning more than $661,375 in taxable income and married couples filing jointly with taxable income exceeding $793,650.

“The IRS also raised the income thresholds for the other six tax brackets, which range from 10 to 35 per cent,” it read.

The new individual federal income tax brackets for 2027 are:

* 10 per cent: Taxable income of $12,800 or less.

* 12 per cent: Taxable income above $12,800.

* 22 per cent: Taxable income above $52,025.

* 24 per cent: Taxable income above $109,125.

* 32 per cent: Taxable income above $208,325.

* 35 per cent: Taxable income above $264,550.

* 37 per cent: Taxable income above $661,375.

For married couples filing jointly, the corresponding thresholds are $25,600, $104,050, $218,250, $416,650, $529,100 and $793,650, respectively.

The standard deduction, which reduces the amount of income subject to federal taxation, will also increase in 2027.

Married couples filing jointly will be able to claim $33,200, up from $32,200 in 2026, while single taxpayers will have a standard deduction of $16,600, compared with $16,100 in the current year.

The adjustments come as Americans contend with rising living costs, including housing, groceries, fuel and other household expenses.

According to the Bureau of Labour Statistics, “the US Consumer Price Index rose by 3.7 per cent in September 2026 compared with the same period a year earlier, up from 3.4 per cent in August.”

The “IRS adjusts federal income tax thresholds annually based on inflation, using the Consumer Price Index to prevent taxpayers from being pushed into higher tax brackets solely because of rising prices.”

The US operates a progressive federal income tax system, meaning different portions of a taxpayer’s income are taxed at different rates rather than applying one rate to their entire earnings.

The applicable tax bracket depends on a “taxpayer’s filing status, which includes single, married filing jointly, married filing separately, head of household and qualifying surviving spouse.”

CNBC also “reported that the IRS had adjusted other tax provisions for 2027, including long-term capital gains thresholds, estate and gift tax exemptions, and eligibility requirements for the Earned Income Tax Credit.”