IRS Releases 2027 Tax Brackets + Capital Gains Update — Here’s What You Need to Know

The IRS just dropped their new rules for how everybody is going to be taxed in the year 2027. Some of the things that have changed is the standard deduction that everybody will get. There's new income tax brackets for everyone. There's new capital gains tax brackets for everyone. And there's some changes to the gift tax laws. So in this short video, I won't waste your time. I'm going to go through everything you need to know about how your income is going to be taxed in 2027. Okay. First of all, let's go through the standard deduction. For a single filer in 2026, it was $16,100. It goes up just $500 to $16,600. A married couple, you can see it's just double that. So they would get $33,200 in 2027. And somebody filing head of household will get $24,950. Now, if somebody happens to be 65 or older, they get additional deductions on top of that. So, first of all, you always get this. A single filer will get $2,100 of additional standard deduction, and married couples will get $1,700 per spouse, okay? Now, the One Big Beautiful Bill Act gives an additional $6,000 on top of all of that to each individual. Okay. Or $12,000, of course, for a married couple. Now this does begin to phase out the $6,000 of additional deductions. If you're modified a gross income gets above $75,000 for a single person or $150,000 for a married couple. Now let's take a look at the tax brackets for 2027. Now, a single filer, this is for their taxable income, so the amount of income that is left after they have subtracted their standard deductions, which we just talked about, or maybe somebody itemizes, and that would therefore be the income that's left after they subtract off all their itemized deductions. What's left? Well, the amount up to $12,800 for a single filer or double that amount for a married couple will get taxed at 10%. Over this amount, the amount that spills over $12,800 for a single person, all the way up to $52,025, the portion that falls within this range will get taxed at 12%. Again, double that amount for a married couple. Now, you can, of course, pause the video here and kind of look at all of of these ranges, you can see there's seven tax brackets. The first five, you'll see that the married couple filing jointly, these amounts are always just double what the single filer is. But the last two tax brackets, the 35% and the 37%, do not work quite that way. You can see the top end of the 35% tax bracket for a single person goes up to $661,375. And for a married couple, $793,650, certainly not double that amount, okay? So these are the tax brackets for the ordinary income received in 2027. Now let's take a look at the capital gains tax brackets. You may not pay any tax at all. There is a 0% tax rate, okay? For a single filer, capital gains, this is for long-term capital gains, which means You bought an asset and you held it for more than one year, then it becomes long-term capital gains and is taxed at these rates. If you do not hold an asset for a full year, so if you bought, let's say a stock or a piece of real estate, and then you flipped it in a few months, Okay, that would be short-term capital gains, and that would be taxed at these rates, which can be much higher, okay? But if you have held an asset for more than one year, it's long-term capital gains, and you use these brackets. Now, a single filer, the 0% rate goes up to $51,050, okay? Double that for a married couple, and $68,354 head of household. Now, how this works is, for example, let's take a married couple and let's say they had $80,000 of wages, ordinary income, taxable wages after subtracting their standard deduction. And then let's say they sold $40,000 worth of stock that had 100% gain. So half of that would be profit. In other words, they had $80,000 of taxable, ordinary income, and then they had $20,000 of Capital gains, long-term capital gains. Capital gains will never push ordinary income into higher brackets. Your capital gains gets layered in on top, and then you would apply these brackets. So in other words, you had the $80,000 of ordinary income, and then you take your $20,000 of long-term capital gains, and you put that on top of that. So you have $100,000 of total income, but you're under this amount. For a married couple, and you would pay 0% on that $20,000 worth of capital gains. Okay, so if we are over these amounts, so then you fall into the 15% tax bracket for the amount over that. Okay, but you can see these ranges go up to fairly high numbers for a single filer, you're in the 15% tax bracket all the way up to $563,200. A married couple goes up to $633,600, you can see the amounts for head of household. And then of course, we have the married filing separately, which is just, of course, half of what married filing jointly is. And then you have to have a lot of capital gains to ever hit the 20% tax bracket. But if we go over these amounts, then of course, you would pay 20% A tax on the capital gains that spilled over into that amount. Now, if your modified adjusted gross income is over $200,000 for a single filer or $250,000 for a married couple, you might be subject to an additional 3.8% tax on top of these rates for long-term capital gains. And finally, let's just talk about the gift tax, okay? The annual gift tax limit in 2026 was 19,000. That's how much you can give an individual without notifying the IRS, okay? And you can give that to as many people as you would like. They don't even have to be family. In 2027, it goes up to $20,000 that you can give each individual. Now, federal estate taxes, very, very few. Estates will ever pay a federal estate tax in the U.S. because this is $15 million. At a married couple, it's double that or $30 million. Not very many estates in the U.S. are over that. But that goes up to $15.48 million in 2027 or double that for a married couple. So again, very few estates will ever have to worry about a federal estate tax. Now, some states do have estate taxes and inheritance taxes, and they can kick in at much lower rates than this, so you might want to check your own particular state for that figure, okay? So I hope this has been helpful. These are the new rules that will take into effect for all income that you start receiving January 1, 2027. And the new tax brackets, the new capital gains brackets that affect all of us. So I hope this has been helpful. Thanks for watching. And I'll see you next time.