If you got a 3% raise this year, here is the question that decides whether you actually keep it: did the tax brackets move at least as fast as your pay? For 2027, the early answer is yes — just barely. Bloomberg Tax projects a 3.2% inflation adjustment to federal brackets, the standard deduction, and dozens of other thresholds, and the IRS will publish the official numbers in mid-October. Nothing is final yet, but the projections are close enough to start planning around right now.
The Headline Numbers
The projected 3.2% adjustment is a touch larger than the 2.7% adjustment that applied for 2026. In dollars, the standard deduction — the number that determines whether itemizing is even worth your time — is projected to rise to:
| Filing status | 2026 (official) | 2027 (projected) |
|---|---|---|
| Single / married filing separately | $16,100 | $16,600 |
| Married filing jointly / surviving spouse | $32,200 | $33,200 |
| Head of household | $24,150 | About $24,925 |
One quirk: Bloomberg Tax's literal math for heads of household yields $24,925, but it expects the IRS to publish $24,950 because of how the statutory rounding rules work. Similar rounding judgment calls apply to a few other provisions, which is why the IRS release — not this forecast — is the number you file against.
The additional standard deduction for age 65 or blindness is projected at $1,700 per person ($2,100 for unmarried filers who are not surviving spouses). For a dependent with only unearned income, the standard deduction stays capped at the greater of $1,400 or $500 plus earned income.
Why Anyone Can Forecast This Before the IRS
There is no mystery and no leak. The tax code indexes brackets to chained CPI (C-CPI-U) over a fixed measurement window: average monthly C-CPI-U from September of two years prior through August of the prior year, compared against the base period. For 2027, that window is September 2025 through August 2026 — and that data is already public, so anyone with the statute and a spreadsheet can run the formula.
This year has one unusual wrinkle. The Bureau of Labor Statistics never published a C-CPI-U value for October 2025 because the lapse in federal appropriations shut down data collection. Bloomberg Tax therefore computed the adjustment on an 11-month average instead of the usual 12. The IRS faces the same gap when it writes the official revenue procedure, so expect a footnote about methodology — but not a materially different answer.
The 2027 Brackets at a Glance
The seven rates (10% through 37%) do not change — only the income thresholds move. Here are the confirmed projected endpoints:
| Filing status | 10% bracket covers taxable income up to | 37% rate kicks in above |
|---|---|---|
| Single | $12,800 | $661,375 |
| Married filing jointly | $25,600 | $793,650 |
| Married filing separately | $12,800 | $396,825 |
| Head of household | $18,250 | $661,350 |
| Trusts and estates | Compressed schedule | $16,500 |
One midpoint worth knowing: Bloomberg Tax puts the top of the 22% bracket for joint filers at $218,250, up from $211,400 in 2026. That matters because the 22% bracket is where a large share of dual-income households and profitable S corporation owners land — every dollar of headroom there is taxed at 22 cents instead of 24.
Two reminders that never get old. First, brackets are marginal: moving into the 24% bracket means only the dollars above the threshold are taxed at 24%, never your whole income. Second, trusts and estates hit the top rate absurdly fast (about $16,500 of retained income), which is why trustees of small family trusts usually distribute income out to beneficiaries in lower brackets rather than letting it stack up inside the trust.
Capital-gains thresholds move with the same formula. The 0% long-term rate is projected to cover gains up to $102,100 for joint filers ($51,050 single), and the 15% rate up to $633,600 joint ($563,200 single). Above that, it is 20% plus a possible 3.8% net investment income tax.
The Numbers Business Owners Should Actually Watch
Brackets get the headlines, but several projected figures matter more to owners of pass-throughs and freelancers:
Section 199A thresholds. The 20% qualified business income deduction stays, with projected phase-in starting at $416,600 of taxable income for joint filers ($208,300 for everyone else) and fully phasing in at $566,600 ($283,300). If your income hovers near those lines, entity choice, retirement contributions, and the timing of a big invoice can swing the deduction by five figures. There is also a new minimum deduction of $415 for active businesses with at least $1,030 of qualified business income.
1099 reporting threshold. Under the One Big Beautiful Bill Act, the Section 6041 reporting threshold jumped from $600 — unchanged for decades — to $2,000 for 2026, and it starts indexing in 2027. Bloomberg Tax projects $2,100. If you issue 1099s to contractors, update your accounts-payable cutoff so you are not collecting W-9s and filing forms for payments the law no longer requires you to report.
Child Tax Credit. Projected at $2,300 per qualifying child, with the refundable portion at $1,800 — up from $2,200 and $1,700. Business owners with kids and lumpy income should remember the credit needs tax liability (or qualifying earned income for the refundable slice) to have value.
Estate and gift amounts. The lifetime estate and gift exemption is projected at $15,480,000 per person, and the annual gift exclusion rises to $20,000 per recipient ($40,000 if spouses split gifts). Now is a calm moment to use annual exclusion gifts and 529 superfunding while the numbers are known.
Retirement and HSA limits. Traditional and Roth IRA contributions are projected at $7,500 for savers under 50, plus $1,100 if you are 50 or older. Roth phaseouts run $250,000–$260,000 joint and $158,000–$173,000 single. The 2027 HSA limits are already official (not projections): $4,500 self-only and $9,000 family coverage. Solo 401(k) and SEP contribution room for 2027 will follow in the IRS pension-limits release, usually about a week after the main revenue procedure.
AMT. The alternative minimum tax exemption is projected at $144,700 joint and $93,000 single, with phaseouts starting at $1,031,900 and $515,950. Fewer households trip the AMT than a decade ago, but ISO exercises and large capital gains can still push you into it.
The senior bonus deduction. The temporary $6,000 deduction for filers 65 and older — available whether you itemize or not — continues through 2028, phasing out above $75,000 of modified adjusted gross income ($150,000 joint) at 6 cents per dollar. Do not confuse it with tax-free Social Security; benefits are still taxable under the usual rules.
What to Do About Withholding Now
Your W-2 withholding runs off IRS Publication 15-T tables that reset every January with the new brackets and standard deduction. That reset is automatic — your employer applies it — but the inputs are yours, and stale inputs are the usual reason a raise turns into an April surprise.
Run a quick paycheck checkup before year-end: take your last pay stub, annualize federal withholding, and compare it against a rough projection of your 2026 liability. If you changed jobs, had a spouse return to work, picked up freelance income, or watched investment income jump, file a fresh Form W-4 now rather than waiting for January. Withholding is treated as paid evenly throughout the year even when it is not, so extra withholding in November and December can still cover a shortfall that equal estimated payments would have needed to start fixing in April.
If you employ people, put two January tasks on the calendar: confirm your payroll provider has loaded the 2027 withholding tables, and remind employees who want changes to submit new W-4s. Nothing in the projections requires mid-year action from employers — but answering "why did my paycheck change in January" goes much better when you saw it coming.
What to Do About Estimated Taxes
Self-employed? The projections do not change your 2026 estimates — those are governed by 2026 law, and your fourth-quarter payment is still due January 15, 2027. What the projections change is your 2027 planning, starting with safe harbors.
You dodge the underpayment penalty for 2027 if your withholding plus timely estimates cover 100% of your 2026 total tax (110% if your 2026 adjusted gross income topped $150,000), or 90% of what you will actually owe for 2027. The prior-year safe harbor is the practical one: once your 2026 return is done, divide that liability by four and you have autopilot quarterly vouchers. Higher 2027 brackets and a bigger standard deduction mean the same income produces slightly less tax — so if you safe-harbor off 2026, expect a modest refund rather than a balance due, and size any Roth conversion or bonus to fit the new headroom.
If your income arrives unevenly — a retail peak season, a single big client payout — the annualized-income installment method lets you match payments to when cash actually arrives instead of paying four equal chunks. It costs you Form 2210 Schedule AI at filing time, but it beats lending the IRS money from a quiet quarter.
Year-End Moves Worth Making Before December 31
Projections this solid support real action in the fourth quarter:
- Manage your bracket, not just your deduction. If 2026 income will land just inside the 22% or 24% bracket, consider accelerating or deferring income — invoice timing, a December equipment purchase, a retirement-plan contribution — to use the lower rate fully without spilling into the next one.
- Revisit Roth conversions. A conversion fills up your current bracket at a known rate. With thresholds rising about 3.2%, next year's brackets give conversions slightly more room — but this year's conversion still prices off 2026 thresholds, so model both years before pulling the trigger.
- Harvest gains at 0%. If your taxable income sits below the 0% capital-gains ceiling, realizing long-term gains up to that line is federally tax-free. The 2027 ceilings ($102,100 joint, $51,050 single) tell you how much room you will have next year if this year is already full.
- Bunch deductions against $33,200. With the joint standard deduction heading to $33,200, alternating itemized years (two years of charitable gifts plus state taxes in one calendar year) beats steady giving for many households. Donor-advised funds exist precisely for this rhythm.
- Top up tax-advantaged accounts. Max 2026 HSA and retirement contributions before the deadlines, and set 2027 contribution rates from the new limits the day the IRS confirms them.
- Spend down FSA balances and use exclusion gifts. Use-or-lose health FSA money, $20,000-per-recipient annual exclusion gifts, and 529 contributions are all calendar-year items — January cannot fix December inaction.
And the mandatory caveat: these are projections. The IRS could round a threshold differently, and Congress could always legislate between now and New Year's Eve. Make reversible moves freely; for irreversible ones — a large conversion, an estate gift, an entity change — wait for the mid-October revenue procedure or build a cushion into your math.
Keep Your Estimates and Brackets in One Place
Bracket projections are only useful if you can see your own numbers against them. Tracking quarterly estimates, withholding, and year-to-date business income in one ledger turns "the 22% bracket tops out at $218,250" from trivia into a decision — how big a December invoice you can send, whether a Roth conversion fits, which safe harbor you are tracking. Beancount.io gives you plain-text accounting with complete transparency and control over your financial data, so projecting next year's liability is a query, not a scavenger hunt. Get started for free and head into 2027 knowing exactly where you stand. For dashboard views of the same books, see what Fava adds on top.
