2027 Tax Brackets Are Here: Why Planning Matters Now

Author: Greg Hyde, Tax Partner

The IRS has released the 2027 federal income tax brackets and inflation adjustments, making now an ideal time for individuals and businesses to revisit their tax strategies. 

The updated thresholds are worth understanding, but they’re only part of the bigger picture. As 2026 comes to a close, there’s still time to make decisions that could affect this year’s tax liability while getting ahead of what’s coming in 2027. 

Whether you’re managing personal finances, growing a business, or preparing for a major financial decision, proactive tax planning can help you identify opportunities, avoid surprises, and make more informed decisions. After all, some of the best tax planning happens long before it’s time to file a return. 

What’s Changing for 2027? 

The IRS announced its 2027 inflation adjustments, including updated federal income tax brackets, standard deductions, tax credits, and business expensing limits. 

The seven federal income tax rates remain unchanged, ranging from 10% to 37%, but income thresholds have increased. 

2027 Federal Income Tax Brackets 

The updated brackets for single filers and married couples filing jointly are: 

• 10%: Up to $12,800 for single filers; $25,600 for married couples filing jointly. 
• 12%: Over $12,800 to $52,025 for single filers; over $25,600 to $104,050 for married couples. 
• 22%: Over $52,025 to $109,125 for single filers; over $104,050 to $218,250 for married couples. 
• 24%: Over $109,125 to $208,325 for single filers; over $218,250 to $416,650 for married couples. 
• 32%: Over $208,325 to $264,550 for single filers; over $416,650 to $529,100 for married couples. 
• 35%: Over $264,550 to $661,375 for single filers; over $529,100 to $793,650 for married couples. 
• 37%: Over $661,375 for single filers; over $793,650 for married couples. 

These are marginal tax brackets, meaning only taxable income within each bracket is taxed at that rate. 

Other Notable 2027 Tax Changes 

• Standard Deduction: Increases to $33,200 for married couples filing jointly and $16,600 for single filers. 
• Child Tax Credit: Maximum credit increases to $2,300 per qualifying child, subject to eligibility requirements. 
• Business Expensing: Section 179 deduction limit increases to $2.64 million, subject to applicable restrictions. 
• Estate and Gift Planning: The federal estate tax exclusion rises to $15.48 million, while the annual gift tax exclusion increases to $20,000 per recipient. 

These adjustments generally apply to the 2027 tax year, with returns filed in 2028. 

Why Is Year-End the Right Time for Tax Planning? 

Tax preparation looks backward. Tax planning looks forward. 

As 2026 comes to a close, there’s still time to evaluate decisions that may affect your current tax liability while preparing for the year ahead. 

For individuals, this may include reviewing income projections, retirement contributions, charitable giving, investment gains and losses, or changes in financial circumstances. 

For business owners, year-end presents an opportunity to assess profitability, equipment purchases, available deductions, and anticipated investments or business transitions. 

Timing Matters 

Certain tax-saving opportunities must be acted upon before December 31, while others require planning well in advance to be most effective. Waiting until tax preparation begins can mean missing opportunities that are no longer available once the year has ended. 

Just as importantly, looking ahead to 2027 provides an opportunity to anticipate changes in income, evaluate updated tax thresholds, and develop a strategy before financial decisions are made. 

The goal isn’t simply to minimize taxes in a single year. It’s to make smarter financial decisions that support long-term goals. 

Why Proactive Tax Planning Makes a Difference 

Tax laws are only part of the equation. Changes in income, business activities, investments, and personal circumstances can have an even greater impact on your overall tax position. 

Working with a trusted tax advisor throughout the year can help identify opportunities that might otherwise be overlooked, coordinate tax decisions with broader financial goals, and prepare for changes before they become challenges. 

Whether you’re growing a business, preparing for retirement, planning a major investment, or simply looking for greater predictability, a proactive approach helps ensure your tax strategy evolves alongside your needs. 

Good tax planning shouldn’t begin when your return is due. It should be part of the decisions you make throughout the year. 

How Can Squire Help? 

Have questions about the 2027 tax changes or how proactive tax planning can benefit you or your business? Contact us at info@squire.com to connect with our tax team and start planning for the year ahead. 

About Squire 

Squire is an audit, tax, and business advisory firm with offices and teams across the Mountain West. With 50+ years of experience, we provide outsourced CFO and controller support, bookkeeping, payroll, sales tax, transaction support, ERP implementation and technology integration, helping businesses operate efficiently, stay compliant and achieve their financial goals. For more information, visit www.squire.com. 

The information contained in this article is provided for general informational purposes only and is not intended to constitute accounting, tax, legal, investment, or other professional advice. The information may not be applicable to your specific circumstances. You should consult with a qualified professional before taking any action or making any decision based on this information.