2027 Tax Brackets Are Out: What Changed and What to Do Before Year-End

Every fall, the IRS releases its inflation adjustments for the next tax year — and every fall, most people shrug. That's a mistake. A few percentage points here and there change where your next dollar is taxed, how much you can give away, and whether a Roth conversion or a bonus lands you in a higher bracket.

The 2027 numbers are out, and the adjustment this year is roughly 3.2%. Most of it is routine. A few pieces aren't. Here's what actually changed, and what to do about it before the calendar flips.

The 2027 Income Tax Brackets

The brackets moved up, which means a bit more of your income is taxed at lower rates before the top brackets kick in. For 2027:

Two things worth noticing:

First, the 32% band for single filers is narrow — it covers only about $56,000 of taxable income. That's a trap for single high earners: a year-end bonus, a large Roth conversion, or a partial business sale can push you straight through the 32% band and into the 35% or 37% bracket in a single year. If you're near a threshold, the timing of income matters more than the amount.

Second, a 2025 law change capped the benefit of itemized deductions for taxpayers in the 37% bracket. If your income has outgrown inflation and you're newly in that top bracket, the timing of large charitable gifts deserves a second look — bunching gifts into a single year can beat spreading them out.

The 0% Capital Gains Bracket

This is the quiet winner for everyday investors. For 2027, joint filers pay 0% on long-term capital gains up to $102,100 of taxable income, and single filers up to $51,050. The 15% rate runs up to $633,600 (joint) and $563,200 (single).

If your income is temporarily low — a gap year, early retirement, a sabbatical — this is the window to realize gains and reset your cost basis at a 0% rate. We cover the mechanics in the 0% capital gains bracket. It's one of the most underused, fully legal tax moves available.

Estate and Gift: The Bigger Numbers

Two changes matter more than the routine bracket bump:

• The estate tax exclusion rises to $15.48 million per person (up from $15 million), or $30.96 million for a married couple.
• The annual gift exclusion rises to $20,000 per recipient (up from $19,000) — so a couple can move $40,000 a year to each child or grandchild, gift-tax-free, without touching the lifetime exemption.

The gift number is the one that matters to ordinary families, not just the wealthy. We break both down in the 2027 estate and gift tax changes.

What Changed for Business Owners and Founders

If you own a business, three numbers moved:

1. Section 179 expensing climbs to $2,640,000 (up from $2,560,000), phasing out once qualifying equipment exceeds $4,230,000.
2. The QBI deduction begins phasing in at $416,600 of taxable income (joint) and $208,300 (single), running to $566,600 and $283,300. Owners of professional practices — physicians, attorneys, consultants — are the most exposed in that range.
3. Qualified Small Business Stock (QSBS) got indexed for the first time. In 2027, the per-issuer gain exclusion cap rises to $15,480,000, and the gross-asset ceiling for qualifying companies to $77,390,000. If you're a founder planning an exit, re-run the math on how much gain you can exclude — the answer just changed.

What Didn't Change (and a Caveat)

The standard deduction and Child Tax Credit were raised, and the IRS flagged that additional credits and deductions under the Working Families Tax Cuts are set to kick in — but the exact figures are worth pulling before you rely on them.

One thing to note: retirement account contribution limits (401(k), IRA, HSA) come in a separate IRS announcement, not in this bracket release. Don't assume they moved 3.2% automatically — check the dedicated notice before you plan next year's deferrals.

Three Moves Before December 31

1. Check which bracket you'll land in. If a bonus or conversion would push you across the 32%→35% line, consider timing it to avoid the single-filer 32%-band squeeze.
2. Look at the 0% capital-gains bracket. Low-income year? Realize gains and reset your basis now, while the 2027 thresholds are favorable.
3. Use the gift exclusion. The annual limit is now $20,000 per person. Gifts completed by December 31 count against this year's limit — if you've been meaning to move money to kids, now is the time.

The full playbook for year-end moves lives in year-end tax moves that actually move the needle. The short version: the 2027 numbers are mostly a gentle bump, but the estate, gift, and QSBS changes are real — and a couple of them reward acting before the year closes.