IRS raises 2027 capital gains and income thresholds to counter inflation

Key points

• The 0% long-term capital gains rate for 2027 applies to single filers with taxable income up to $51,050 and married couples filing jointly up to $102,100.
• The standard deduction increases to $16,600 for single filers and $33,200 for married couples filing jointly, up from $16,100 and $32,200 in 2026.
• All seven federal income tax brackets have higher income thresholds for 2027, with the top 37% rate applying to incomes over $661,375 for singles and $793,650 for joint filers.
• The lifetime gift and estate tax exemption rises to $15.48 million per individual, up from $15 million in 2026.
• Tax rates remain unchanged; the adjustments are designed to prevent bracket creep caused by inflation.

Background

The IRS regularly adjusts tax parameters annually to account for inflation. Previous coverage noted that the One Big Beautiful Bill Act established a permanent $15 million estate tax exemption, which is now being adjusted for inflation. The 2027 adjustments follow the same pattern of raising thresholds without changing the underlying tax rates.

How outlets are covering it

CNBC emphasizes the impact of the new capital gains brackets on investors' 2027 sales and rebalancing decisions, noting that many long-term investors hold profitable assets after years of market growth. Kiplinger focuses on the standard deduction increases and highlights the additional standard deduction for taxpayers age 65 and older, noting a new bonus deduction of $6,000 for seniors introduced by the 2025 Trump tax bill. USA Today provides a detailed breakdown of all seven federal income tax brackets and explains how the progressive tax system applies rates only to income within each bracket. All three sources agree that the tax rates themselves remain unchanged, but they differ in their emphasis: CNBC on investment planning, Kiplinger on senior tax benefits, and USA Today on overall income tax thresholds.

Why it matters

The higher thresholds mean that taxpayers can earn more before moving into higher tax brackets or paying capital gains taxes. This can reduce the tax burden for middle- and upper-middle-income households. For investors, the higher 0% capital gains threshold may encourage holding assets longer or selling in 2027 to take advantage of the lower rate. For high-net-worth individuals, the increased estate and gift tax exemption allows for more tax-free wealth transfer.

What to watch

Taxpayers will use these 2027 parameters when filing their 2027 tax returns in early 2028. Investors may adjust their 2027 sales and rebalancing strategies to take advantage of the higher capital gains thresholds. Tax professionals will advise clients on whether to itemize or claim the standard deduction based on the new amounts.