Federal Tax Brackets and Standard Deduction: 2027 vs 2026

The IRS announced the 2027 adjustments on November 5, 2026, in news release IR-2026-133 and Revenue Procedure 2026-35. The seven tax rates are unchanged at 10%, 12%, 22%, 24%, 32%, 35%, and 37%. Only the dollar thresholds move. The standard deduction for 2027 is $16,600 for single filers and married individuals filing separately, $33,200 for married couples filing jointly, and $24,925 for heads of household. In 2026 the amounts are $16,100, $32,200, and $24,150.

For ordinary income, the top of each bracket moves up a little over 3%. For a married couple filing jointly in 2027, the 12% bracket runs from $25,600 to $104,050 of taxable income, the 22% bracket from $104,050 to $218,250, and the 24% bracket from $218,250 to $416,650. In 2026 those same bracket edges are $24,800, $100,800, $211,400, and $403,550. For a single filer in 2027, the 12% bracket runs from $12,800 to $52,025, the 22% bracket to $109,125, and the 24% bracket to $208,325. The 37% bracket starts above $661,375 for single filers and above $793,650 for joint filers in 2027, against $640,600 and $768,700 in 2026. These are taxable-income thresholds, so they apply after the standard deduction.

Long-term capital gains rates stay at 0%, 15%, and 20%, with higher thresholds. In 2027, the 0% rate applies to taxable income up to $51,050 for single filers and $102,100 for married couples filing jointly, and the 15% rate runs up to $563,200 and $633,600, with 20% above that. In 2026 the 0% limits are $49,450 and $98,900, and the 15% limits are $545,500 and $613,700. Gains are stacked on top of ordinary income, so every dollar of Roth conversion or IRA withdrawal pushes gains toward the next rate. The 3.8% net investment income tax is a separate calculation and is not indexed.

The additional standard deduction for taxpayers who are 65 or older, or blind, also rises. For 2027 it is $1,700 per qualifying condition for married filers, and $2,100 for unmarried filers, up from $1,650 and $2,050 in 2026. A married couple where both spouses are 65 or older therefore has a 2027 standard deduction of $36,600, compared with $35,500 in 2026. This add-on is separate from the senior deduction created by the 2025 tax law, which is a fixed $6,000 per eligible person for tax years 2025 through 2028. It phases out at 6 cents per dollar of modified adjusted gross income above $75,000 for single filers and $150,000 for joint filers. Because it is set by statute, it did not rise for 2027.

Several retirement thresholds do not move with inflation at all. The income levels at which Social Security benefits become taxable, $25,000 and $32,000 for 50% taxation and $34,000 and $44,000 for 85%, are set by statute and have never been indexed, so each year more of a benefit gets taxed as income rises. The senior deduction phase-out thresholds are also fixed. Medicare IRMAA thresholds come from CMS, not this Rev. Proc. What is settled is the timing: Medicare looks back two years, so 2027 income sets 2029 Part B and Part D premiums.

The raised thresholds help most if you are filling the 12%, 22%, or 24% brackets on purpose, which is how many retirees with large pre-tax balances reduce lifetime tax. Higher thresholds mean the same dollar of conversion lands in a lower bracket than it would have a year earlier. The illustration below uses a married couple with $60,000 of other taxable income. Up to the top of the 22% bracket, the room for a Roth conversion is $151,400 in 2026 and $158,250 in 2027, about $6,850 more. That difference is small relative to the balances involved, A roughly 3% shift in thresholds does not change the bracket structure.

The planning method stays the same: project taxable income for the year, find the bracket where the ceiling is, and check the other cliffs that sit on top of it. For a retiree between 55 and 72, those cliffs include the taxable share of Social Security, the phase-out of the senior deduction, ACA premium credit limits before Medicare, and IRMAA after it. A conversion that fits under the 22% bracket can still raise the tax on Social Security benefits and reduce the senior deduction, so the true marginal rate can be higher than the bracket suggests. Arizona's flat income tax rate is 2.5% for 2026, which adds a small, predictable layer on top of the federal rate.

Dates matter here. The 2027 tax year is the income you earn during calendar 2027, and the return is filed in 2028. The 2026 return, due in April 2027, still uses the 2026 brackets, so conversions or withdrawals completed by December 31, 2026 are taxed under the lower 2026 thresholds. Because IRMAA looks back two years, a 2027 conversion affects Medicare premiums in 2029, so the bracket room is only one side of the ledger. These figures are illustrative planning inputs, not a prediction of any household's outcome, and the right amount depends on your full return.

• Treating the 2027 thresholds as if they apply to the 2026 return, when 2026 income is taxed under the 2026 brackets and filed in 2027.
• Assuming the senior deduction and the Social Security taxation thresholds rise with inflation, when both are fixed by statute and neither moved for 2027.
• Reading a bracket as the full marginal rate, and missing the extra tax from Social Security becoming taxable and the senior deduction phasing out in the same dollars.
• Adding the additional age 65 standard deduction on top of the senior deduction as if they were one benefit, when they are separate and the second one phases out with income.
• Treating the 2027 thresholds as final planning room without checking the bracket for the year the income is actually received.