The IRS has released various inflation-adjusted amounts for 2027. These annual adjustments affect a wide range of tax provisions, including income tax brackets, the standard deduction and various tax benefits.
Take these 2027 amounts into consideration as you implement year-end tax planning strategies for 2026 and prepare for the coming year.
Individual income tax rates
Tax-bracket thresholds increase for each filing status, but because they’re based on percentages, they increase more significantly for the higher brackets. For example, the top of the 10% bracket will increase by $400–$800, depending on filing status, but the top of the 35% bracket will increase by $12,475–$24,950, depending on filing status.
Last year’s One Big Beautiful Bill Act (OBBBA) made the rates permanent. The income tax brackets will continue to be annually indexed for inflation.
Standard deduction
The OBBBA made permanent the approximate doubling of the standard deduction amount for each filing status that went into effect back in 2018. The amounts will continue to be annually adjusted for inflation.
In 2027, the standard deduction will be $33,200 for married couples filing jointly, $24,925 for heads of households, and $16,600 for single filers and married taxpayers filing separately. These are increases of $1,000, $775 and $500, respectively.
Long-term capital gains rate
The long-term gains rate applies to realized gains on investments held for more than 12 months. For most types of assets, the rate is 0%, 15% or 20%, depending on your income. While the 0% rate applies to most income that would be taxed at 12% or less based on the taxpayer’s ordinary-income rate, the top long-term gains rate of 20% kicks in well before the top ordinary-income rate does.
AMT
The alternative minimum tax (AMT) is a separate tax system that limits some deductions, doesn’t permit others and treats certain income items differently. If your AMT liability exceeds your regular tax liability, you must pay the AMT.
Like the regular tax brackets, the AMT brackets are annually indexed for inflation. In 2027, the threshold for the 28% bracket will increase by $8,000 for all filing statuses except married filing separately, which will increase by half that amount.
The OBBBA made the AMT exemption amounts permanent, and the amounts continue to be indexed for inflation. The exemption amounts in 2027 will be $93,000 for singles and heads of households, $144,700 for joint filers, and $72,350 for separate filers, increasing by $2,900, $4,500 and $2,250, respectively, over 2026 amounts.
The AMT exemption phases out over certain income ranges. It’s completely phased out if AMT income exceeds the top of the applicable range. The exemption phaseout ranges in 2027 will be $515,950–$701,950 for singles and heads of households and $1,031,900–$1,321,300 for joint filers. Amounts for married couples filing separately are half of those for joint filers.
Child-related breaks
Certain child-related breaks are annually adjusted for inflation but don’t necessarily go up every year. In addition, these breaks are limited based on a taxpayer’s modified adjusted gross income (MAGI). Taxpayers whose MAGIs are within an applicable phaseout range are eligible for a partial break — and breaks are eliminated for those whose MAGIs exceed the top of the range.
Here are the 2027 figures for two important child-related breaks:
The Child Tax Credit. The OBBBA made this credit permanent and adjusts it annually for inflation. For 2027, the credit increases by $100 to $2,300.
The OBBBA also made permanent the annual inflation adjustments to the limit on the refundable portion of the credit. For 2027, the refundable portion increases by $100 to $1,800.
Be aware that the Child Tax Credit phases out for higher-income taxpayers, and the phaseout thresholds aren’t inflation-indexed. Under the OBBBA, they’re permanently $200,000 for singles and heads of households and $400,000 for joint filers.
The adoption credit. The maximum credit will increase by $580, to $18,250 in 2027. Under the OBBBA, a portion of the credit is refundable, and that portion is annually indexed. For 2027, the refundable portion is $5,280 (up from $5,120 for 2026).
The MAGI phaseout range for eligible taxpayers adopting a child will increase in 2027 — by $8,600. It will be $273,680–$313,680 for joint, head of household and single filers.
Gift and estate taxes
The unified gift and estate tax exemption and the generation-skipping transfer tax exemption are both adjusted annually for inflation. In 2027, the amount will be $15.48 million (up from $15 million in 2026).
The gift tax annual exclusion increases by $1,000, to $20,000 per giver per recipient in 2027.
Make informed tax planning decisions
The impact of the 2027 inflation adjustments will vary based on taxpayers’ individual circumstances. Understanding how these changes affect your tax situation is essential to identifying potential tax-saving opportunities. Contact us to discuss strategies for minimizing your tax liability in 2026 and beyond.
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