By Naveen Athrappully

Federal tax authorities announced higher income tax brackets and other annual inflation adjustments for tax year 2027.

The standard deduction and other tax provisions, such as capital gains brackets, the earned income tax credit limit, and estate and gift tax exemptions, have also increased, the IRS said on Nov. 5.

The highest tax rate for the 2027 tax year is 37 percent, which applies to taxable income above $661,375 for single filers and above $793,650 for married couples filing jointly.

All income tax thresholds for tax year 2027 are higher than in 2026.

The single filer tax brackets are:

10 percent for income up to $12,800

12 percent for income between $12,801 and $52,025

22 percent for income between $52,026 and $109,125

24 percent for income between $109,126 and $208,325

32 percent for income between $208,326 and $264,550

35 percent for income between $264,551 and $661,375

37 percent for income over $661,375

“Hardworking American taxpayers will continue to benefit from the Working Families Tax Cuts (WFTC) and will see WFTC credits and deductions increase with this adjustment,” IRS Chief Executive Officer Frank J. Bisignano said in the statement.

Frank Bisignano arrives to testify at his Senate Finance Committee confirmation hearing in Washington on March 25, 2025. Kevin Dietsch/Getty Images

The Working Families Tax Cuts, also known as the One Big Beautiful Bill Act, was signed into law by President Donald Trump last year and significantly impacted federal taxes, deductions, and credits.

Standard Deduction Increase

Under the Working Families Tax Cuts, the standard deduction for tax year 2026 was set at $16,100 for single filers and $32,200 for married couples filing jointly. For tax year 2027, this rose to $16,600 and $33,200, respectively.

The standard deduction is the fixed amount that taxpayers can deduct from their income, and with the latest increase, single filers and married couples can exclude $500 and $1,000 more of their income from taxation, respectively.

The long-term capital gains tax rate is 0 percent for single filers with total taxable income (ordinary income plus capital gains, combined) of up to $51,050. For married couples filing jointly, the limit is $102,100.

A 15 percent long-term capital gains tax rate applies to single filers with total taxable income between $51,051 and $563,200 for single filers and between $102,101 and $633,600 for married couples.

Where total taxable income is above $563,200 (single) and $633,600 (married filing jointly), the long-term capital gains tax rate is 20 percent.

Taxpayers can give up to $20,000 per recipient in gifts for tax year 2027 without gift tax obligations, up from $19,000 in 2026.

The tax exclusion for estates of people who die in 2027 is $15,480,000, up from $15,000,000 in 2026.

The child tax credit limit for 2027 is $2,300, up $100 from 2026.

The Earned Income Tax Credit limit for taxpayers with three or more qualifying children rose from $8,231 to $8,496 for the 2027 tax year.

2026 Filing Season

The IRS collected $5.6 trillion in taxes in fiscal 2026, the agency said in an Oct. 29 statement. This is an almost 5 percent increase from the previous year.

Americans at all income levels saw a decline in average tax rate for returns submitted during the 2026 filing season, the IRS said.

“The overall average tax rate fell to 12.6 percent, a decrease of 4 percent from 2025, showing that Americans benefited from the President’s signature tax cut law,” the agency said, referring to the Working Families Tax Cuts. The conclusion is based on individual income tax returns filed through mid-July.

In the 2026 filing season, the average refund amount was up 11 percent from the previous year. The total amount of refunds issued to taxpayers rose by more than 20 percent, the IRS said.

A 1040 Internal Revenue Service tax form, in this file photo. Madalina Kilroy/The Epoch Times

The average refund amount for the 2026 filing season was $3,571 as of March 20, the IRS said in late March, adding that the agency had disbursed more than $202 billion in refunds by then.

Americans who use a tax return preparer must ensure the service providers have a valid preparer tax identification number (PTIN).

For tax year 2027, tax preparers must renew their PTINs, the IRS said in a Nov. 4 statement. PTINs must be renewed annually, and the current-year PTIN is set to expire on Dec. 31.

“The PTIN program helps the IRS identify legitimate paid preparers and reinforces the responsibility that comes with preparing federal tax returns,” Bisignano said. “IRS appreciates the time and effort that tax practitioners take each year to comply with the requirement to renew or obtain a PTIN.”