The 2027 tax brackets are out: what moved, and two Magnolia households worked

Every fall the IRS moves the tax brackets and a few dozen other numbers so inflation alone does not push people into a higher rate. The 2027 set came out Thursday in news release IR-2026-133 and the 70-page Revenue Procedure 2026-35. First, the timing. These figures apply to income earned in 2027, on returns filed in 2028. The return due next April uses the 2026 numbers.

1. The standard deduction

Who it reaches: anyone who does not itemize. Someone 65 or older, or blind, adds $1,700 in 2027, or $2,100 if unmarried, under section 3 of the revenue procedure. The paperwork: none. It is a line on Form 1040.

2. The brackets

The seven rates stay the same, from 10% to 37%. What moves is where each one starts. Taxable income, which is income after the deduction, falls into these 2027 ranges:

For comparison, the 2026 ranges end the 12% bracket at $100,800 for a married couple and $50,400 for a single filer. Each threshold rose about 3.2%. A rate applies only to the dollars inside its range, so crossing into a higher bracket does not change the tax on the dollars below it.

3. Credits and the rest

• Child tax credit: up to $2,300 per child, from $2,200, with up to $1,800 of it refundable, from $1,700.
• Earned income tax credit: up to $8,496 for a filer with three or more qualifying children, from $8,231.
• Health flexible spending arrangement: $3,500 through payroll, up $100, with up to $700 carried over where the plan allows.
• Capital gains: the 0% rate on long-term gains covers taxable income up to $102,100 for a married couple and $51,050 for a single filer. The 15% rate runs to $633,600 and $563,200.
• Gifts: a person can give $20,000 to any one recipient in 2027 without filing a gift tax return, up from $19,000.

Two Magnolia households, worked

A married couple in 77354 with two children under 17, earning $112,500 in wages, about the ZIP's median household income in Census figures. They take the standard deduction.

• 2026: taxable income of $80,300, tax of $9,140 before credits, less $4,400 in child credits. Federal income tax: $4,740.
• 2027, same pay: taxable income of $79,300, tax of $9,004, less $4,600 in credits. Federal income tax: $4,404, or $336 less.
• 2027, with a raise equal to this year's 3.1% average wage growth: pay of about $115,990, federal income tax of about $4,823. That is $83 more than in 2026 on $3,490 more pay. Had the brackets and credits stayed at 2026 levels, the same raise would have meant about $5,159.

A single worker earning $52,000. In 2026 the federal income tax comes to $4,060. In 2027, on the same pay, it is $3,992, a difference of $68.

The zero case: a household with no change in pay and no children sees only the deduction and bracket shifts, which is the $68 above for the single worker. Texas has no state income tax, so there is no second set of numbers.

Assumptions: wages are the only income; no itemized deductions, no other credits and no payroll taxes counted; the 3.1% figure is the BLS 12-month change in average hourly earnings reported November 6. The arithmetic is ours.

If nobody does anything

Nothing is filed to get these numbers. They apply to everyone automatically for the 2027 tax year. What the change does not touch is the return due April 15, 2027, which covers 2026 and uses the 2026 tables.

Things to check

• The taxable income line on last year's Form 1040, to see where it lands in the 2027 table.
• The ages of children at the end of 2027. The child tax credit counts children under 17 at year's end.
• Any long-term gain planned for 2027, against the 0% range above.
• A workplace flexible spending election during open enrollment, against the new $3,500 limit. The 2027 health savings account limits are in last week's resource.

What did not change

The rates themselves. The personal exemption, which stays at zero, as the release notes. And the deductions written into the 2025 law, which this revenue procedure does not list as adjusted. Those are in the paper's September walk-through, New on the Books 2026.