IRS Adjusts 2027 Capital Gains Tax Brackets and Standard Deductions Amid Inflation

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The Internal Revenue Service (IRS) has announced updated capital gains tax brackets for 2027, adjusting taxable income limits to account for inflation. These changes, unveiled on Thursday, apply to long-term capital gains—profits from assets held for more than one year—and will affect investors planning sales or portfolio rebalancing in the coming year.

In addition to raising the long-term capital gains thresholds, the agency updated dozens of other tax provisions for 2027, including federal income tax brackets, the estate and gift tax exemption, and eligibility for the earned income tax credit. These adjustments come as many Americans continue to manage the financial impact of rising living costs, including housing, groceries, and gasoline.

Despite recent market volatility, long-term investors who have benefited from years of market growth may find their asset sales subject to different tax liabilities under the new brackets. Understanding these limits is crucial for investors looking to optimize their tax strategies in 2027.

2027 Long-Term Capital Gains Tax Brackets

The long-term capital gains tax rates for 2027 are structured as follows:

• 0% rate: Taxable income up to $51,050 for single filers ($102,100 for married couples filing jointly).
• 15% rate: Taxable income up to $563,200 for single filers ($633,600 for married couples filing jointly).
• 20% rate: Taxable income of $563,201 or more for single filers ($633,601 or more for married couples filing jointly).

How the Capital Gains Brackets Work

The capital gains tax rate you owe—either 0%, 15%, or 20%—depends on your taxable income and filing status. Taxable income is calculated by subtracting the greater of your standard or itemized deductions from your adjusted gross income (AGI).

For the 2027 tax year, the standard deduction is increasing to $16,600 for single filers, up from $16,100 in 2026, and to $33,200 for married couples filing jointly, up from $32,200.

With these standard deductions applied, single filers with taxable income of $51,050 or less, and married couples filing jointly with taxable income of $102,100 or less, will qualify for the 0% long-term capital gains rate next year.

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