Your 2027 Tax Brackets Are in Place: 7 Key Numbers That Could Shape Your Wallet

The IRS has adjusted the tax landscape again — but one major number still hasn’t moved, and retirees feel it most.

The IRS has lifted every federal income tax bracket for 2027. If your income stays unchanged, you’ll pay less tax on the same paycheck.

That’s not a windfall; it’s how the system works. Each year, the IRS raises dozens of tax figures to keep inflation from pushing taxpayers into higher brackets simply because prices rise.

I’ve worked as a CPA since 1981, and I read these announcements every year. Most stories focus only on the bracket table. I want to explain what the numbers actually mean for your money — and highlight the one major figure Washington left untouched.

One timing note: these amounts apply to income earned in 2027, on the return you’ll file in early 2028. The return due next spring still uses the 2026 figures.

1. Every bracket rose by roughly 3.2%

The tax rates themselves remain 10%, 12%, 22%, 24%, 32%, 35% and 37%. What changed is the income level where each bracket begins. According to the IRS, the 22% bracket for a single filer now starts above $52,025 of taxable income, up from $50,400.

For married couples filing jointly, the 22% bracket now starts above $104,050, compared with $100,800 before. The 24% bracket begins above $218,250, and the 32% bracket above $416,650.

In practical terms, that matters. If a single taxpayer earns $70,000 in both 2026 and 2027 and takes the standard deduction, the 2027 federal income tax bill would be about $280 lower, by my calculation.

That’s a modest benefit, but note the tradeoff: if your raise outpaces inflation, some of that extra income can still fall into a higher bracket. Indexing helps protect you from inflation, not from making more money.

2. The standard deduction increased by $500 to $1,000

For 2027, the standard deduction rises to $16,600 for single filers, $33,200 for married couples filing jointly, and $24,925 for heads of household. This is the portion of income the IRS does not tax if you do not itemize.

A deduction that is $1,000 larger does not give you $1,000 in cash. It lowers taxable income by $1,000, saving you only the amount equal to your top tax rate. For someone in the 12% bracket, that means $120. It is not huge, but it is automatic.

If terms like “adjusted gross income” sound confusing, a plain-English guide can help make sense of the basics.

3. You may be able to sell more stock without paying tax

This is the figure I would pay closest attention to. Long-term capital gains — profits from investments held for more than a year — are taxed at 0%, 15% or 20%, depending on taxable income.

For 2027, a married couple can have up to $102,100 of taxable income and still pay 0% on long-term gains, according to CNBC. For single filers, the cutoff is $51,050. Both thresholds are about 3.2% higher than the current year.

In practice, that can create planning opportunities. For example, a retired couple with $70,000 of taxable income from pensions and IRA withdrawals could realize about $32,000 in long-term gains in 2027 and owe no federal income tax on them.

That could mean trimming an oversized stock position, or selling shares and buying them back to reset the cost basis. In investing, few things beat a profit the IRS does not tax.

The catch is that other income can crowd gains out of the 0% bracket, and gains can also make more of Social Security taxable. There are pitfalls to watch for before selling.

If you want help running the numbers before making a move, you can consult a financial advisor.

4. There is more room for a low-cost Roth conversion

The 12% tax bracket remains one of the better bargains in the code, and it has gotten wider. For 2027, it covers taxable income up to $52,025 for single filers and $104,050 for joint filers — giving couples about $3,250 more room than before.

Why does that matter? Retirees below that level may be able to move money from a traditional IRA to a Roth and pay no more than 12% on the conversion.

That added income can also increase how much of Social Security becomes taxable, so the math should be checked carefully. But once money is in a Roth, it grows tax-free and can later be withdrawn tax-free.

Pay 12% now — or possibly 22% or more later, when required withdrawals begin? That is the central question. Many people wait until it is too late to consider it.

If you still have room in your current bracket, there may be time to act before year-end. A larger conversion can also affect Medicare-related income thresholds.

A quick reminder: when it comes to money, the best time to learn was years ago. The second-best time is now. Sign up for the free Money Talks Newsletter and start today. It takes seconds, costs nothing, and could affect your retirement.

5. You can give away $20,000 per person without paperwork

The annual gift tax exclusion rises to $20,000 in 2027, up from $19,000. That is the amount you can give to any one person in a year without filing a gift tax return.

The limit is per giver and per recipient. That means a married couple with three adult children could give each child $40,000 — or $120,000 total — in 2027 without filing a gift tax return, provided each spouse uses his or her own money.

The lifetime estate exclusion also rises, to $15.48 million per person. In other words, federal estate tax is unlikely to affect most readers.

Still, estate planning matters for reasons beyond taxes. As executor of my parents’ estate, I found the paperwork far more important than the tax bill. If your will is outdated or missing, it may be time to get your estate plan organized.

6. Families get a bigger child credit and health FSA limit

The maximum child tax credit increases to $2,300 per child for 2027, up $100. Up to $1,800 of that amount is refundable, so some households can receive it even if they owe no tax.

The top earned income tax credit for working families with three or more children rises to $8,496. Health flexible spending accounts also get a higher contribution cap of $3,500, with up to $700 allowed to roll over if an employer permits it.

If you have unused FSA money, do not let it disappear at year-end. There are several moves worth making before the deadline.

7. The one number that has not changed since 1984

Here is the detail the IRS release does not emphasize. Some tax thresholds are not inflation-adjusted at all, and the biggest one hits retirees.

Social Security benefits became taxable in 1984. If your “combined income” is above $25,000 as a single filer or $32,000 as a couple, part of your benefit is taxable, according to the Social Security Administration. Those limits have never changed.

When the rule began, about 8% of beneficiary families paid tax on their benefits. By 2014, the Congressional Budget Office estimated that 49% of beneficiaries were paying tax on them, according to an SSA research paper. The law stayed the same; inflation changed everything else.

So while Congress protects wages from inflation each year, the same inflation keeps pushing more Social Security income into the tax net. That double standard continues to catch retirees off guard.

Two other figures remain frozen. The extra $6,000 deduction for people age 65 and older is still $6,000, and the IRS says it is scheduled to disappear after 2028. The income limits for the Lifetime Learning Credit also have not been updated since 2020.

What to do now

With new brackets in place, employers will likely withhold a bit less from paychecks starting in January. That may be fine for a simple tax situation. But if you have side income, investment gains or a working spouse, it could leave you short when you file in 2028.

Set aside 15 minutes early next year to use the IRS’s free Tax Withholding Estimator. If you are retired and no tax is being withheld, learn the rules before a surprise bill arrives.

Then pay attention to the bigger planning opportunities: tax-free gains, a lower-cost Roth conversion and gifts to family. The IRS has made all three a little more favorable. Ignoring them is the only real mistake.