IRS unveils higher capital gains tax brackets for 2027

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The IRS has unveiled higher capital gains tax brackets for 2027.

In its announcement Thursday, the agency boosted the taxable income limits for the long-term capital gains brackets, which apply to assets owned for more than one year.  

It also increased figures for dozens of other provisions, including federal income tax brackets, the estate and gift tax exemption, and eligibility for the earned income tax credit, among others.

Despite post-election stock market volatility, many long-term investors hold profitable assets after years of market growth.

The new capital gains brackets could impact investors' 2027 plans for sales or rebalancing, which can trigger taxes for brokerage account investments.

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Here are the long-term capital gains tax brackets for 2027:

• 0%: taxable income up to $51,050 ($102,100 for married couples filing jointly)
• 15%: taxable income up to $563,200 ($633,600 for married couples filing jointly)
• 20%: taxable income of $563,201 or more ($633,601 or more for married couples filing jointly)

The latest round of IRS inflation adjustments for 2027 come as many Americans wrestle with affordability amid the rising cost of housing, groceries, gasoline and other living expenses.

How the capital gains brackets work

The capital gains rate you pay — 0%, 15% or 20% — is based on which bracket you fall into based on taxable income. 

You calculate taxable income by subtracting the greater of the standard or itemized deductions from your adjusted gross income.

For 2027, the standard deduction will rise to $16,600 for single filers, up from $16,100, and $33,200 for married couples filing jointly, up from $32,200.

Starting in 2027, single filers with taxable income of $51,050 or less and married couples filing jointly with $102,100 or less, will qualify for the 0% long-term capital gains rate.