What Are the 2027 Tax Brackets? What the New IRS Numbers Mean for Your Year-End Plan

The IRS released the 2027 tax brackets on November 5, 2026. The seven rates are unchanged, from 10% to 37%, but every bracket is about 3.25% wider: for married couples filing jointly, the 24% bracket now runs to $416,650 of taxable income, up from $403,550 this year (IRS news release IR-2026-133). The standard deduction rises to $33,200 for couples and $16,600 for single filers.

These numbers apply to returns you'll file in 2028, but they matter now. Several year-end decisions, including Roth conversions, bonus timing and gifts, come down to a comparison between this year's bracket and next year's. Now we have both.

As a Houston CPA and financial planner, I treat this announcement as the starting gun for the last round of year-end planning. Here's what changed and how I'd use it.

This is general education, not advice for your specific situation.

What are the 2027 tax brackets?

The full tables are in Revenue Procedure 2026-35. Here is where each bracket ends for the two most common filing statuses, compared with 2026 (Revenue Procedure 2025-32).

These are taxable income figures, after the standard deduction or itemized deductions. Heads of household have their own table in the revenue procedure; their 24% bracket ends at $208,300 in 2027.

For a sense of scale, I ran a married couple with $400,000 of taxable income in both years. Their regular federal income tax is $81,196 under the 2026 brackets and $80,718 under 2027's, a difference of $478. That's my arithmetic from the IRS tables, before credits, the net investment income tax or anything else on the return.

How much is the 2027 standard deduction?

The standard deduction rises to $33,200 for married couples filing jointly, $24,925 for heads of household, and $16,600 for single filers and married individuals filing separately (IRS news release IR-2026-133). Taxpayers who are 65 or older or blind add $1,700 each if married, or $2,100 if unmarried (Revenue Procedure 2026-35).

For Houston homeowners deciding whether to itemize, the other half of the comparison is the state and local tax cap. The cap is set by statute rather than by this announcement: it rises 1% a year from $40,400 in 2026, which works out to $40,804 for 2027, and the phase-down threshold rises from $505,000 to $510,050 of modified adjusted gross income (my calculation from the statute). I covered how that plays out with Texas property taxes in the SALT cap and Texas property tax deduction.

What else changed for high earners and business owners?

Sources: Revenue Procedure 2025-32, Revenue Procedure 2026-35, IRS news release IR-2026-133.

Two items aren't part of this announcement. The 3.8% net investment income tax isn't among the inflation adjustments; it still starts at $250,000 of modified adjusted gross income for joint filers and $200,000 for single filers (IRS, Net Investment Income Tax). And the 401(k) and IRA contribution limits aren't in this announcement at all; the IRS publishes those in a separate notice.

What changed for gifts and estates?

The annual gift exclusion rises to $20,000 per recipient in 2027, up from $19,000, and the basic exclusion for estates and lifetime gifts rises to $15.48 million per person, up from $15 million (IRS news release IR-2026-133). A married couple can give $40,000 per recipient in 2027 without touching their lifetime exemption.

For families who give every year, the practical point is that the two years are separate. A gift made by December 31 uses the 2026 exclusion of $19,000; a gift made in January uses the 2027 exclusion of $20,000. If each spouse gives in both years, a couple can move $78,000 to one child across the two calendar years without using any lifetime exemption.

What should I do before December 31?

• Compare your 2026 and 2027 brackets. If you expect to be in the same bracket both years, the wider 2027 bracket slightly favors pushing income into 2027. If your income will jump next year, from a business sale, a big bonus or the end of a sabbatical, pulling income into 2026 can make more sense.
• Size a Roth conversion to the 2026 bracket. The room in the 24% bracket for a married couple is $192,150 of taxable income this year and $198,400 next year. A conversion counts in the year the money leaves the IRA, so the 2026 bracket is the one that matters for a December conversion. My Roth conversion guide walks through the other lines to check, including Medicare premiums two years out.
• Check the 0% capital gains bracket. If your taxable income is near $98,900 this year (married filing jointly), you may be able to realize some long-term gains at 0%. Next year the line is $102,100.
• Business owners: look at the qualified business income threshold. If your taxable income is close to the 2026 threshold of $403,500 (joint), the timing of income, retirement plan contributions and equipment purchases can affect how much of the deduction you keep. The 2027 threshold is $416,600.
• Make 2026 gifts by December 31. Then plan the January gifts at the new $20,000 amount.
• Work through the rest of the list. My year-end tax planning checklist covers deferrals, charitable giving under this year's new rules and required distributions.

How I can help

The new brackets are a table; the useful part is running them against your actual income for 2026 and a realistic estimate for 2027. In a working session we can build both years side by side in planning software and decide which moves to make before December 31.

Mercer Street's work is billed at $600 per hour with a 2-hour minimum ($1,200). See how working together works, and schedule a consultation when you're ready.