IRS 2027 tax brackets: How much can you earn before hitting the 37% tax rate?

The 37% federal income-tax bracket could start at higher income levels in 2027. A preliminary estimate puts the start of the 37% tax bracket at more than $793,650 in taxable income for married couples filing jointly. For single taxpayers, the 37% bracket could start at more than $661,375 in taxable income. These are early estimates and not official IRS figures.

IRS 2027 tax brackets and projected 37% federal income tax thresholds (REUTERS/Ken Cedeno/File Photo) (REUTERS)Bloomberg Tax released its 2027 tax projections on Tuesday. Its estimate uses a 3.2% inflation adjustment to calculate possible 2027 tax brackets. The IRS usually announces the official inflation-adjusted tax brackets for the next year in the fall. The final figures will come after the full statutory calculation period is completed. Bloomberg Tax made the projection based on the available inflation data.

The projected 2027 threshold would be higher than the official 2026 level. For 2026, the IRS set the 37% bracket to begin at $768,700 for married couples filing jointly. For single filers, the 2026 threshold is $640,600.

The IRS published these official 2026 figures. If the 2027 estimates are correct, the 37% threshold would increase by:

The 24% tax bracket may also give taxpayers more room in 2027. Projected taxable income of up to $416,650 for married couples filing jointly would remain within the 24% bracket. For single filers, the projected limit is $208,325.

These figures could matter when people plan large financial transactions.

People planning a Roth conversion could look at the projected 24% bracket. Investors exercising nonqualified stock options could also consider the possible higher threshold. People expecting a large bonus may use the projected brackets when deciding when income should be received. These are planning scenarios, not guarantees of the final 2027 tax rules. Taxpayers would also need to keep enough cash available to pay the resulting tax.

Entering a higher tax bracket does not mean all income is taxed at the higher rate. This is an important point when looking at the 37% threshold. For example, reaching the 37% bracket does not mean every dollar of a person's taxable income suddenly faces a 37% tax.

Only the portion of taxable income that falls within the relevant bracket is taxed at that rate. The IRS explains that income is taxed in separate bands, with each portion taxed at the rate for that band.

The figures are based on taxable income, not simply salary. The projected $793,650 and $661,375 thresholds refer to taxable income. They are not simply the amount of salary or total money a person earns. Deductions can reduce income before federal income tax is calculated. This means someone earning more than a bracket threshold in gross income may still have taxable income below that threshold.

The standard deduction is also expected to increase in 2027. The estimated 2027 standard deduction is:

This means more income could be excluded from regular federal income-tax calculations for people who take the standard deduction.

Long-term capital-gains tax brackets are also being projected for 2027. A separate estimate from tax analyst Kelly Phillips Erb gives possible 2027 thresholds for long-term capital gains.

Erb published these preliminary 2027 tax projections.

Capital-gains planning cannot be based on one threshold alone. Long-term capital-gains rates depend on a taxpayer's overall taxable income. Ordinary income and capital gains interact when determining the applicable rate.

This means investors should not look at the capital-gains threshold separately from their other income. The estimates could still be useful for considering year-end gain harvesting and other investment decisions.

There is more uncertainty around this year's early 2027 estimates. Bloomberg Tax normally uses inflation data over a specific calculation period to project the coming year's tax figures. For this estimate, October 2025 data were unavailable. Bloomberg Tax therefore used an 11-month average of chained consumer-price data, instead of the usual 12-month window. That makes the early numbers subject to change.

The final numbers could move before the IRS announcement. Later revisions to inflation data could change the calculations. The interpretation of the tax law could also affect the final figures. IRS rounding rules could change individual thresholds by some amount. Erb also noted that rounding can affect the final published amounts.

Higher tax brackets do not necessarily mean taxpayers are getting richer. Tax brackets are adjusted for inflation. If a person's salary rises at roughly the same rate as inflation, the higher bracket limits may not create a major increase in real purchasing power. In other words, earning more dollars does not automatically mean having more money left after accounting for higher prices.

For now, taxpayers should treat the numbers as planning estimates. The projected $793,650 threshold for married couples and $661,375 threshold for single filers are not yet official IRS numbers. The same applies to the projected 24% bracket, standard deduction and capital-gains thresholds. Taxpayers can use the estimates to compare possible 2027 income and investment decisions. The figures should be updated once the IRS officially releases its 2027 inflation-adjusted tax brackets.

Durva More is a Senior Content Producer at Hindustan Times, where she covers finance, and global news. She brings experience across digital and television journalism, with a strong focus on breaking news, business reporting, and international affairs. Before joining Hindustan Times, Durva worked as an International News Writer at The Economic Times, covering a diverse range of subjects including global politics, business, sports, entertainment, and major world events. She also worked as a Business Reporter with NDTV Profit. A postgraduate diploma holder in Journalism from the Asian College of Journalism, Durva is passionate about field reporting and storytelling. She thrives on the adrenaline of chasing stories, speaking with people from different walks of life, and amplifying voices that deserve to be heard. Her reporting is driven by curiosity, accuracy, and a commitment to making complex subjects accessible to readers. When she is not chasing stories or covering breaking news, Durva enjoys reading books and painting. She loves exploring new ideas, meeting people, and learning about different perspectives. For her, both journalism and art are ways to understand the world and tell stories that matter.Read More