Federal tax brackets are projected to rise by 3.2% in 2027, according to an analysis by Bloomberg Tax. The projected adjustment follows a reported 3.4% annual increase in inflation as measured by the August Consumer Price Index, influenced by higher energy costs including record diesel prices exceeding $6 a gallon.
The Internal Revenue Service (IRS) typically announces official inflation-adjusted tax brackets in October or November for the following year. Bloomberg Tax based its forecast on the "chained Consumer Price Index," the same measure used by the IRS. Due to a government shutdown that delayed October 2025 inflation data from the Department of Labor, the analysts used an 11-month average to reach their projections.
Under the forecast, the standard deduction would increase to $33,200 for married couples filing jointly and $16,600 for single filers, up from $31,500 and $15,750 in 2026, respectively. For married couples, the 12% tax bracket is projected to cover income between $25,601 and $104,050. For single filers, the 10% rate would apply to income up to $12,800, an increase of $400 over the 2026 limit.
For individual households, the 3.2% increase translates to tangible shifts in how much income is shielded from higher rates. A single filer would see the top of the 12% bracket rise by $1,625 to $52,025, while a married couple would see the top of the 35% bracket rise by $24,950. Additionally, the $1,700 increase in the standard deduction for married couples means that a larger portion of their annual earnings is not subject to federal income tax at all, which could result in larger tax refunds for some filers.
The projected adjustments are a response to broader economic pressures, specifically the 3.4% annual inflation rate reported in August 2026. These changes set a precedent for how the IRS handles missing data, as Bloomberg Tax noted the use of an 11-month average following a government shutdown that halted Labor Department reporting. While these projections provide an early planning guide for taxpayers and professionals, the final figures depend on the official IRS announcement expected in late 2026. The new brackets and deductions would take effect for the 2027 tax year.