FederalIncomeTax News & Analysis

IRS Sets 2027 Federal Income Tax Brackets with Top Rate at 37%

The IRS announced new federal income tax brackets and standard deductions for the tax year 2027, which will affect returns filed in 2028. The agency raised the income thresholds for each bracket and increased figures for provisions such as long-term capital gains brackets, the estate and gift tax exemption, and the earned income tax credit eligibility. For 2027, the top federal tax rate of 37% will apply to individuals with taxable income above $661,375 and married couples filing jointly with incomes over $793,650. Other tax rates include 35%, 32%, 24%, 22%, 12%, and 10%, each applying to defined income ranges. The standard deduction rose to $33,200 for married couples filing jointly and $16,600 for single filers, both higher than the 2026 amounts. These adjustments come amid rising living costs in housing, groceries, and gasoline, with the consumer price index increasing 3.7% in September 2026 compared to a year prior. The IRS indexes tax brackets annually to keep pace with inflation. This update matters to taxpayers as it determines the rates they will pay on their taxable income in 2027 and impacts federal revenue estimates for government budgeting.