According to the latest estimate released recently by Bloomberg Tax, the United States federal tax brackets are expected to increase by about 3.2% in 2027 due to inflation. This adjustment will allow American taxpayers to earn more taxable income (or pay less in taxes) before reaching higher tax rates, helping to alleviate the impact of “bracket creep” – where if income levels do not keep up with inflation, there may be hidden tax increases.
The Internal Revenue Service (IRS) adjusts tax brackets and related thresholds annually based on inflation to prevent wages from being pushed into higher tax rates simply due to price increases. While the IRS has not officially announced the adjusted figures for 2027 (usually released in October or November), Bloomberg Tax released their prediction on September 11 (last Friday) using the same inflation index as the IRS – the Chained Consumer Price Index.
Due to the government shutdown in October 2025 causing inflation data to be unavailable, Bloomberg Tax calculated using an average of 11 months. The forecast shows that all seven income thresholds for tax brackets will generally increase by around 3.2%, higher than the 2.7% for the current tax year, allowing married couples to earn more income before entering higher tax rates. Specifically:
The main cause of increased inflation pressure is the rise in prices in 2026, with diesel prices soaring to over $6 per gallon due to the Iran war, reaching a historical high, while gasoline prices remain above $4 per gallon.
The August Consumer Price Index report showed an annual inflation rate of 3.4%, higher than expected.
For example, for married couples filing jointly, the income range subject to the 12% tax rate is expected to be between $25,601 and $104,050, with the upper limit increasing by around $3,250 compared to 2026. Income below $25,601 will still be subject to the 10% tax rate. The tax brackets for single filers will also be adjusted accordingly, in most cases around half of those for married couples.
According to Bloomberg Tax’s prediction, the income threshold for single filers is expected to increase by 3.2% in 2027. Specifically:
Table: Aimee Picchi; Source: Bloomberg Tax
The standard deduction for next year will also increase. The standard deduction for married couples filing jointly will rise to $33,200, and for single filers, it will increase to $16,600. In comparison, the standard deductions for the 2026 tax year were $31,500 and $15,750 respectively.
This adjustment helps taxpayers maintain purchasing power in an inflationary environment and avoid hidden tax increases. However, these figures are all predictions from Bloomberg Tax, and the final figures will be based on the IRS’s official announcement. Taxpayers and tax professionals can refer to these estimates in advance for their 2027 tax planning.
(Reference: Adapted from CBS NEWS report)