How the IRS adjusts tax brackets for inflation, and when the 2027 figures arrive

Every year the IRS raises the income thresholds for each federal tax bracket, the standard deduction and many other amounts to account for inflation. The tax code ties those increases to the chained Consumer Price Index, and the IRS publishes the results each fall for the following tax year. The agency says: "Each fall, the IRS issues two documents detailing the results of these adjustments for the coming year."

The figures for tax year 2026 came out on October 9, 2025, in news release IR-2025-103, with Revenue Procedure 2025-32 giving the details. The figures for 2025 were released on October 22, 2024. None of the IRS news releases issued in October 2026 through October 23 announced the figures for tax year 2027.

The formula in the tax code

Section 1(f) of the Internal Revenue Code sets out the method. The yearly cost-of-living adjustment is the percentage by which the chained CPI for all urban consumers (C-CPI-U) for the preceding calendar year exceeds a base tied to 2016 (2017 for some bracket amounts, under section 1(j)). For this purpose, the C-CPI-U for a calendar year is the average of the index over the 12 months ending on August 31 of that year.

In practice, that means the 2027 adjustment depends on the chained index for September 2025 through August 2026, a period that ended on August 31. What remains is the official calculation and the IRS announcement.

Dollar amounts are not left at odd figures. For the tax brackets and the standard deduction, the law says an increase that is not a multiple of $50 is rounded down to the next lowest multiple of $50. For the bracket amounts of single filers and of married people filing separately, the step is $25, which is why some of the single-filer thresholds below end in 25 or 75. Because of the rounding down, each year's increase can be slightly smaller than the measured inflation.

The chained index is used because it "allows for substitution across item categories," in the words of the Bureau of Labor Statistics. Our guide to the Consumer Price Index explains the difference between the main indexes.

The 2026 amounts, for returns filed in 2027

The IRS says the tax year 2026 adjustments generally apply to tax returns filed in 2027.

The rates themselves do not change with inflation. Only the income levels at which each rate starts are adjusted. A household whose income rises only as fast as the brackets stays in roughly the same position.

Other amounts that move

The same release adjusts many other figures for 2026. Among them:

• The maximum earned income tax credit is $8,231 for taxpayers with three or more qualifying children.
• The monthly limit for the qualified transportation fringe benefit rises to $340, up $15 from 2025.
• The health flexible spending account salary reduction limit rises to $3,400, up $100.
• The alternative minimum tax exemption for unmarried individuals is $90,100, and it begins to phase out at $500,000.
• The annual exclusion for gifts remains at $19,000.

Retirement savings limits come in a separate release. For 2026, the IRS announced on November 13, 2025, that the employee contribution limit for 401(k) plans rose to $24,500 from $23,500, and the IRA limit rose to $7,500 from $7,000. The catch-up contribution for people aged 50 and over in most 401(k)-type plans rose to $8,000, and the higher catch-up for ages 60 to 63 remained $11,250. The IRA catch-up rose to $1,100.

What does not move

Some amounts are not adjusted for inflation. The IRS says that "By statute, certain items that were indexed for inflation in the past are currently not adjusted." For tax year 2026, personal exemptions remain at zero, as in 2025. The income range over which the Lifetime Learning Credit phases out has not been adjusted for tax years beginning after December 31, 2020.

One 2027 figure is already known

The Social Security Administration has already set the maximum amount of earnings subject to Social Security tax for 2027: $192,300, up from $184,500 in 2026. Social Security payroll tax applies to earnings up to that amount, so high earners will pay it on up to $7,800 more of their 2027 pay. Details are in our report on the 2027 Social Security changes.

What the IRS suggests now

The 2026 figures above are the ones that generally apply to returns filed in 2027. In an October 23 reminder, the IRS said taxpayers can use the Tax Withholding Estimator on IRS.gov to check whether the right amount of federal income tax is being withheld from their pay, and that they should consider reviewing withholding after a major life or income change, such as marriage, divorce, a new child or a job change. Past years' releases are collected on its page of inflation-adjusted tax items by tax year.