The IRS has released its inflation-adjusted tax figures for the 2027 tax year under Revenue Procedure 2026-35.
Most retirement-related inflation adjustments are not included in this guidance. Those amounts are generally announced separately and have not yet been released.
Key inflation-adjusted amounts for 2027 include:
Standard Deduction
The standard deduction increases to $33,200 for married couples filing jointly, $16,600 for single taxpayers and married individuals filing separately, and $24,925 for heads of household.
Individual Income Tax Rates
The top marginal tax rate remains 37%, applying to taxable income above $661,375 for single taxpayers and $793,650 for married couples filing jointly. The remaining rates are 35%, 32%, 24%, 22%, 12%, and 10%, with income thresholds adjusted for inflation.
Child Tax Credit
The maximum credit increases to $2,300 per qualifying child, with up to $1,800 potentially refundable.
Alternative Minimum Tax (AMT)
The exemption increases to $93,000 for unmarried individuals, phasing out beginning at $515,950. For married couples filing jointly, the exemption is $144,700, with the phaseout beginning at $1,031,900.
State Tax Exclusion
The basic estate tax exclusion increases to $15.48 million for individuals who die in 2027, up from $15 million in 2026.
Annual Gift Tax Exclusion
The annual exclusion increases to $20,000 per recipient, up from $19,000 in 2026. The exclusion for gifts to a spouse who is not a U.S. citizen increases to $201,000.
Section 179 Expensing
The maximum amount businesses may expense under Section 179 increases to $2.64 million. The Section 179 limit for sport utility vehicles increases to $33,100.
Adoption Credit
The maximum adoption credit increases to $18,250. The credit begins to phase out for taxpayers with modified adjusted gross income above $273,680 and is fully phased out at $313,680. Up to $5,280 of the credit may be refundable.
Employer-Provided Childcare Credit
The maximum credit increases to $515,943.67, or $619,132.40 for an eligible small business.
Earned Income Tax Credit (EITC)
The maximum EITC increases to $8,496 for qualifying taxpayers with three or more qualifying children. The maximum credit is $7,552 for two qualifying children, $4,573 for one qualifying child, and $685 for taxpayers with no qualifying children.
Qualified Transportation Benefits
The monthly limit for qualified transportation fringe benefits and qualified parking increases to $350.
Health Flexible Spending Arrangements (FSAs)
The employee salary-reduction contribution limit increases to $3,500, while the maximum permitted carryover increases to $700 for plans that allow unused amounts to be carried forward.
Medical Savings Accounts (MSAs)
For self-only coverage, the annual deductible must be between $3,000 and $4,550, with a maximum out-of-pocket limit of $6,050. For family coverage, the deductible must be between $6,050 and $9,050, with a maximum out-of-pocket limit of $11,050.
Foreign Earned Income Exclusion
The exclusion increases to $137,300, up from $132,900 for 2026.
Understanding the 2027 inflation adjustments is an important part of effective year-round tax planning. Your Windes advisor can help you evaluate how these changes may affect you or your business and develop tax planning strategies aligned with your financial goals. Contact us to start planning for 2027.
