The 2027 tax year is the second full year under the One Big Beautiful Bill Act (OBBBA), signed July 4, 2025, which made most of the Tax Cuts and Jobs Act (TCJA) provisions permanent and added several new deductions. If you filed a 2026 return, the structure will look familiar. But the numbers have shifted -- brackets, deduction thresholds, and contribution limits all move with inflation -- and a few provisions that were brand new in 2026 are settling into their second year with slightly different dollar amounts.
This guide covers what's new for tax year 2027 (the return you'll file in early 2028), what carried over unchanged from 2026, and what to watch as the IRS releases final inflation adjustments later this year. The IRS typically publishes official 2027 figures in October or November 2026. Where final numbers aren't available yet, we use projected amounts based on the statutory formulas in the OBBBA and expected inflation. Projected figures are marked as such.
The Big Picture: What the OBBBA Made Permanent
Before getting into the year-over-year changes, it helps to understand the baseline. The OBBBA resolved years of uncertainty about whether TCJA provisions would sunset after 2025. Here's what is now permanent federal tax law -- not expiring, not subject to a future cliff:
- Seven tax brackets at rates of 10%, 12%, 22%, 24%, 32%, 35%, and 37%, with annual inflation indexing
- Higher standard deduction (roughly double the pre-TCJA amount), adjusted annually for inflation
- No personal exemptions -- the trade-off for the higher standard deduction
- Child Tax Credit at $2,200 per qualifying child (up from the pre-TCJA $1,000), indexed for inflation going forward
Technical detail
OBBBA Section 110101. The CTC phaseout thresholds of $200,000 single / $400,000 MFJ are permanent but not inflation-indexed. - 20% QBI deduction under Section 199A for qualified pass-through business income, now permanent OBBBA Section 110301. The TCJA version was set to expire after 2025.
- 100% bonus depreciation for qualified property, permanently restored
Technical detail
OBBBA Section 110401. This reverses the TCJA phase-down that had reduced bonus depreciation to 60% for 2025 and would have continued declining. - Estate and gift tax exemption at $15 million per individual ($30 million for married couples), with inflation indexing starting in 2027 OBBBA amends IRC Section 2010(c)(3). Unlike the TCJA's temporary increase, this has no sunset.
- AMT exemption made permanent at elevated levels, with inflation indexing
- Medical expense deduction floor permanently set at 7.5% of AGI OBBBA Section 110601. This had been temporarily set at 7.5% and was scheduled to revert to 10%.
- Miscellaneous itemized deductions permanently eliminated OBBBA Section 70110. The TCJA had only suspended these through 2025.
Knowing these are permanent removes the "plan now before the law changes" urgency that dominated 2024-2025 tax advice. The question for 2027 is simpler: how do the inflation-adjusted numbers affect your specific situation?
The IRS adjusts bracket thresholds annually using the Chained Consumer Price Index (C-CPI-U). For 2026, the adjustment was approximately 2.7%. The 2027 adjustment will depend on inflation data through August 2026, which isn't available yet. Based on current CPI trends, a similar adjustment of roughly 2.5% to 3% is expected.
Using a 2.7% projection (matching the 2026 adjustment), here are the estimated 2027 brackets:
| Rate | Single (Projected) | Married Filing Jointly (Projected) |
|---|---|---|
| 10% | Up to ~$12,750 | Up to ~$25,500 |
| 12% | ~$12,751 - ~$51,800 | ~$25,501 - ~$103,500 |
| 22% | ~$51,801 - ~$108,600 | ~$103,501 - ~$217,100 |
| 24% | ~$108,601 - ~$207,200 | ~$217,101 - ~$414,450 |
| 32% | ~$207,201 - ~$248,200 | ~$414,451 - ~$496,400 |
| 35% | ~$248,201 - ~$657,900 | ~$496,401 - ~$789,400 |
| 37% | Over ~$657,900 | Over ~$789,400 |
These are projections, not final IRS figures. The official numbers will be published in Revenue Procedure 2026-XX, expected in Q4 2026. For comparison, the confirmed 2026 brackets are: 10% up to $12,400 (single) / $24,800 (MFJ), through 37% above $640,600 (single) / $768,600 (MFJ). IRS Revenue Procedure 2025-32; Tax Foundation 2026 bracket analysis.
What this means in practice: if your taxable income is near a bracket boundary, the inflation adjustment could save you a few hundred dollars without any change in your actual earnings. A married couple with $770,000 in taxable income paid the 37% rate on the last $1,400 in 2026. In 2027, that same income might fall entirely within the 35% bracket, saving roughly $280.
Standard Deduction for 2027 (Projected)
The 2026 standard deduction is $16,100 for single filers and $32,200 for married filing jointly. Applying the same ~2.7% inflation adjustment:
| Filing Status | 2026 (Confirmed) | 2027 (Projected) |
|---|---|---|
| Single | $16,100 | ~$16,550 |
| Married Filing Jointly | $32,200 | ~$33,050 |
| Head of Household | $24,150 | ~$24,800 |
The additional standard deduction for filers who are blind or age 65 and older also adjusts annually. In 2026, the additional amount is $1,600 for single/HOH filers and $1,550 for married filers. Expect similar modest increases for 2027. IRC Section 63(c). The IRS rounds standard deduction amounts to the nearest $50.
SALT Deduction: The Cap Ticks Upward
The OBBBA raised the state and local tax (SALT) deduction cap from the TCJA's $10,000 to $40,000 for 2025, then set it at $40,400 for 2026 with a built-in 1% annual increase through 2029. For 2027, the cap is:
$40,804 ($20,402 for married filing separately)
This isn't an inflation adjustment -- it's a flat 1% statutory increase written into the law. OBBBA Section 110201. The applicable limitation for each year from 2027-2029 is 101% of the prior year's amount.
There's a catch for high earners. The SALT cap phases down once your modified adjusted gross income (MAGI) exceeds $500,000 ($250,000 for married filing separately). The reduction is 30 cents for every dollar over the threshold. At $600,000 MAGI or above ($300,000 MFS), the cap drops back to the old $10,000 limit. These income thresholds also increase by 1% per year, so for 2027 the phase-down starts at approximately $505,050. OBBBA Section 110201. The $500,000 threshold is increased by 1% annually alongside the cap itself.
The SALT cap reverts to $10,000 in 2030. If you live in a high-tax state, the 2027-2029 window is the last period with the higher $40,000+ cap. Plan large purchases or prepayments that generate deductible state taxes accordingly. The cap also phases down for high earners -- at MAGI above ~$605,050, you are back to the $10,000 limit even now.
For pass-through business owners, note that the SALT cap does not apply to state taxes paid at the entity level through a pass-through entity tax (PTET) election, where available. Most states now offer PTET as a workaround. IRS Notice 2020-75 established the framework for PTET deductibility.
Retirement Contribution Limits
401(k), 403(b), and 457 Plans
The 2026 employee deferral limit is $24,500. The 2027 limit hasn't been announced, but based on the inflation rounding rules, projections point to $24,500 or $25,000. Technical detail
The catch-up framework under SECURE 2.0 continues:
- Age 50-59 or 64+: Standard catch-up of $8,000 (2026 amount; 2027 amount TBD but likely $8,000 or $8,500)
- Age 60-63: Enhanced "super catch-up" of $11,250 (2026 amount), bringing the potential total to $35,750
Technical detail
SECURE 2.0 Act Section 109. The enhanced catch-up for ages 60-63 is the greater of $10,000 or 150% of the standard catch-up, indexed for inflation.
Mandatory Roth catch-up for high earners: If you earned more than $150,000 in FICA wages in the prior year, your catch-up contributions must go into a Roth (after-tax) 401(k) account. This rule took effect in 2026 and continues in 2027. It does not affect the base $24,500 deferral -- only the catch-up portion. SECURE 2.0 Act Section 603.
Traditional and Roth IRAs
The 2026 contribution limit is $7,500, with an additional $1,100 catch-up for age 50 and older (total $8,600). IRA limits adjust less frequently than 401(k) limits because the rounding increment is $500. The 2027 limit is projected to remain at $7,500 unless cumulative inflation triggers the next step. IRC Section 219(b)(5)(A).
Roth IRA income phase-outs for 2027 have not been released, but for reference the 2026 ranges are $153,000-$168,000 (single) and $242,000-$252,000 (MFJ). If your income exceeds these ranges, see our guide on the backdoor Roth strategy. IRC Section 408A(c)(3). Phase-out thresholds adjust annually for inflation.
Health Savings Accounts (HSAs)
For 2026, HSA contribution limits are $4,400 (self-only) and $8,750 (family), plus an extra $1,000 if you're 55 or older. The 2027 amounts will be published later this year. HSA limits tend to increase modestly each year. IRC Section 223(b). HSA limits are indexed using CPI-U, not Chained CPI.
HSAs remain one of the most tax-efficient accounts available: contributions are above-the-line deductions, growth is tax-free, and withdrawals for qualified medical expenses are tax-free. Unlike FSAs, HSA balances carry forward indefinitely.
New OBBBA Deductions Entering Their Second Year
Several deductions introduced by the OBBBA in 2025 or 2026 continue into 2027. All of these are claimed on Schedule 1-A, a new form the IRS created for OBBBA-specific above-the-line deductions. They're available regardless of whether you itemize or take the standard deduction.
No Tax on Tips (Continues Through 2028)
Tipped workers can deduct up to $25,000 in qualified tip income from their federal adjusted gross income. The deduction phases out for taxpayers with MAGI over $150,000 ($300,000 MFJ). Important: this is an income tax deduction only. Tips remain subject to Social Security and Medicare (FICA) taxes. Technical detail
To claim this deduction, you must be an employee who receives tips in an occupation that traditionally and customarily receives them. The deduction does not apply to self-employed individuals or to service charges automatically added by the employer.
Non-exempt employees under the Fair Labor Standards Act (FLSA) can deduct the overtime premium portion of their overtime pay -- the extra 0.5x on time-and-a-half pay -- up to $12,500 per individual ($25,000 for MFJ if both spouses qualify). The deduction phases out at the same $150,000 / $300,000 thresholds as the tip deduction. Like tips, overtime pay remains subject to FICA taxes. OBBBA Section 110702. Only the premium portion qualifies, not the base rate paid during overtime hours.
Car Loan Interest Deduction (Continues Through 2028)
Taxpayers can deduct up to $10,000 in interest paid on a qualified car loan for a new vehicle assembled in the United States. The vehicle must have been purchased after December 31, 2024, and before January 1, 2029. The deduction phases out beginning at $100,000 MAGI for single filers and $200,000 for MFJ. Technical detail
This deduction continues to generate questions. A few clarifications based on the first year of IRS guidance:
- Refinanced loans do not qualify -- only the original purchase loan
- Leases do not qualify (the bank owns the vehicle)
- Used vehicles do not qualify, even if assembled in the U.S.
Senior Deduction (Continues Through 2028)
Taxpayers age 65 and older can claim an additional deduction of up to $4,000 per person ($8,000 MFJ where both spouses are 65+). This deduction phases out at $75,000 MAGI for single filers ($150,000 MFJ), reducing by 6 cents for every dollar above the threshold, and disappearing entirely at $141,667 (single) or $283,333 (MFJ). OBBBA Section 110801. Not available to those filing married filing separately.
This was widely reported as "$6,000 per person" when the OBBBA passed, but the actual mechanics in the statute produce a maximum of $4,000 per individual. Combined with the existing additional standard deduction for seniors ($1,600 single / $1,550 married per spouse in 2026), the total additional deduction for an eligible senior filing single is approximately $5,600.
The senior deduction is claimed on Schedule 1-A, not automatically included in the standard deduction. If you are using tax software, make sure it generates Schedule 1-A. If your CPA is preparing the return, confirm they are applying this deduction -- it was new for 2026 and is easy to miss. Combined with the additional standard deduction for seniors, an eligible single filer age 65+ gets roughly $5,600 in total additional deductions.
The OBBBA set the estate and gift tax exemption at a flat $15 million per individual for 2026 ($30 million for married couples using portability). Starting in 2027, that $15 million is indexed for inflation using 2025 as the base year. Technical detail
Projected 2027 exemption: approximately $15.4 million per individual, depending on the inflation factor applied.
The annual gift tax exclusion was $19,000 per recipient in 2026. For 2027, expect a modest increase to $19,000 or $20,000 depending on the inflation rounding. IRC Section 2503(b). The exclusion adjusts in $1,000 increments.
For most Americans, the $15 million+ exemption means federal estate tax is not a concern. But state estate taxes can apply at much lower thresholds -- as low as $1 million in Oregon and Massachusetts. If your net worth exceeds your state's threshold, the federal exemption doesn't help with the state bill. See Estate Planning vs. Tax Planning for how these interact.
Charitable Deduction Changes (Continuing from 2026)
The OBBBA made two changes to charitable deductions that continue in 2027:
AGI floor for itemizers. Charitable contributions are deductible only to the extent they exceed 0.5% of your AGI. For a taxpayer with $300,000 in AGI, the first $1,500 of charitable giving produces no deduction. OBBBA Section 110502. This floor is permanent -- it doesn't expire.
Reduced benefit for top-bracket filers. Taxpayers in the 37% bracket receive only a 35% tax benefit from their itemized deductions (including charitable contributions). The practical effect is small -- 2 cents less per dollar deducted -- but it's worth knowing. OBBBA Section 110501.
Non-itemizer charitable deduction. The OBBBA created a deduction of up to $1,000 ($2,000 MFJ) for cash donations made to operating charities, available to taxpayers who take the standard deduction. Contributions to donor-advised funds do not qualify for this deduction. OBBBA Section 110503.
The 0.5% AGI floor on charitable deductions is permanent and applies to all itemized charitable contributions. Amounts below the floor do not carry forward -- they are permanently lost. For a taxpayer with $400,000 AGI, the first $2,000 of charitable contributions each year produces no deduction. Bunching multiple years of giving into a single year reduces the floor's proportional impact.
What Stayed the Same from 2026
Some of the most important tax rules for 2027 are the ones that didn't change (or changed only by inflation adjustment):
- Seven rate brackets at the same percentages (10% through 37%) -- only the dollar thresholds shift
- SALT cap mechanics -- same structure, just 1% higher at $40,804
- QBI deduction -- still 20% of qualified business income, with expanded phase-in ranges made permanent OBBBA increased the phase-in to $75,000 single / $150,000 MFJ, up from the TCJA's $50,000 / $100,000
- 100% bonus depreciation -- permanent for qualified property placed in service after January 20, 2025
- No personal exemptions -- this is permanent; don't expect them to return
- No miscellaneous itemized deductions -- investment fees, unreimbursed employee expenses, and personal tax preparation costs remain non-deductible OBBBA Section 70110
- AMT structure -- permanent with inflation-indexed exemption; the phaseout rate is 50% (doubled from the pre-OBBBA 25%)
Technical detail
OBBBA Section 110601. For 2026, AMT exemption is $90,100 single / $140,200 MFJ with phaseout beginning at $500,000 / $1,000,000. - RMD start age remains 73 (increases to 75 in 2033 under SECURE 2.0) SECURE 2.0 Act Section 107
- Medical expense deduction floor stays at 7.5% of AGI
- Student loan interest deduction remains up to $2,500, above the line, subject to income phaseouts IRC Section 221
What to Watch for in Late 2026
Several pieces of information that will affect your 2027 planning aren't available yet:
- Official 2027 bracket thresholds and standard deduction -- expected in IRS Revenue Procedure published October/November 2026
- 2027 retirement contribution limits -- published separately by the IRS, usually in early November
- 2027 HSA limits -- published by the IRS in May or June 2026
- State conformity updates -- some states choose whether to follow new federal deductions (like the car loan interest or tip deduction) on a year-by-year basis. Check your state's revenue department website after the state legislature's session ends.
- SALT cap workaround availability -- pass-through entity tax elections vary by state and some states modify their programs annually
If you're doing tax planning for 2027 before the official numbers drop, use the 2026 confirmed figures as your floor and add 2-3% for bracket and threshold estimates. You'll be close enough for planning purposes, and you can adjust when the IRS publishes final numbers.
2027 Quick Reference Table
| Item | 2026 (Confirmed) | 2027 (Projected) |
|---|---|---|
| Standard deduction (Single) | $16,100 | ~$16,550 |
| Standard deduction (MFJ) | $32,200 | ~$33,050 |
| 401(k) employee deferral | $24,500 | $24,500 - $25,000 |
| 401(k) catch-up (age 50-59, 64+) | $8,000 | ~$8,000 - $8,500 |
| 401(k) super catch-up (age 60-63) | $11,250 | ~$11,250 - $11,750 |
| IRA contribution limit | $7,500 | ~$7,500 |
| IRA catch-up (age 50+) | $1,100 | ~$1,100 |
| HSA (self-only) | $4,400 | TBD (est. ~$4,500) |
| HSA (family) | $8,750 | TBD (est. ~$8,950) |
| SALT deduction cap | $40,400 | $40,804 |
| SALT phase-down threshold | $500,000 MAGI | ~$505,050 MAGI |
| Estate/gift tax exemption | $15,000,000 | ~$15,400,000 |
| Annual gift exclusion | $19,000 | $19,000 - $20,000 |
| Child Tax Credit | $2,200 | ~$2,200 (indexed) |
| QBI deduction | 20% | 20% |
| Top marginal rate | 37% | 37% |
| AMT exemption (Single) | $90,100 | ~$92,500 |
| AMT exemption (MFJ) | $140,200 | ~$144,000 |
Projected amounts assume ~2.7% inflation adjustment and standard IRS rounding rules. Official figures will be published in Q4 2026.