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IRS 2027 inflation adjustments: New tax brackets, standard deduction and other thresholds for US expats
The IRS has released its tax year 2027 inflation adjustments for almost 70 tax provisions, including new tax brackets, a $33,200 standard deduction for married couples filing jointly and higher gift, estate and foreign earned income exclusion thresholds. The IRS announced the tax year 2027 inflation adjustments on November 5, 2026 in Revenue Procedure 2026-35. The 2027 amounts generally apply to returns filed in 2028, so the returns US expats file in 2027 still use the 2026 figures.
The adjustments change most of the dollar thresholds that US citizens and green card holders living abroad, as well as expat business owners, use on a federal return. They cover the income tax brackets, the standard deduction, the alternative minimum tax (AMT) exemption, the child tax credit and the gift, estate and foreign earned income exclusions.
The key distinction is timing: each new amount applies to tax year 2027, not to the tax year 2026 returns filed in 2027.
At a glance – the 8 key facts
| Item | Detail |
|---|---|
| Instrument | Revenue Procedure 2026-35 (news release IR-2026-133), November 5, 2026 |
| Scope | almost 70 tax provisions adjusted for inflation |
| Applies to | tax year 2027, on returns generally filed in 2028 |
| Tax brackets 2027 | 7 rates from 10% to 37%; top rate over $661,375 single, $793,650 married filing jointly |
| Standard deduction 2027 | $16,600 single, $33,200 married filing jointly, $24,925 head of household |
| Gift exclusions 2027 | $20,000 annual; $201,000 for gifts to a non-US citizen spouse |
| Estate basic exclusion 2027 | $15,480,000 |
| Foreign earned income exclusion 2027 | $137,300, up from $132,900 |
What is Revenue Procedure 2026-35?
Revenue Procedure 2026-35 is IRS guidance, released November 5, 2026, that sets the tax year 2027 inflation adjustments for almost 70 tax provisions. According to IRS news release IR-2026-133, they include the tax rate schedules, the standard deduction, the AMT exemption, the child tax credit, and the gift, estate, and foreign earned income exclusions.
According to IRS news release IR-2026-133 on the tax year 2027 inflation adjustments, the 2027 amounts generally apply to tax returns filed in 2028. Returns filed in 2027 cover tax year 2026. TFX's news on the 2026 tax brackets and inflation adjustments sets out those earlier figures.
The release also states that personal exemptions remain at $0 for tax year 2027, as they were for 2026.
Which tax thresholds change for 2027?
According to IR-2026-133, the 2027 adjustments cover almost 70 provisions. The thresholds below are the ones with published 2026 and 2027 amounts that Americans abroad are most likely to use, from deductions and credits to gifts and estates.
Every threshold in the table rises for 2027 except the personal exemption, which stays at $0: the joint standard deduction by $1,000, the child tax credit and its refundable portion by $100 each, the annual gift exclusion by $1,000, the non-citizen spouse gift exclusion by $7,000, the estate basic exclusion by $480,000 and the foreign earned income exclusion by $4,400.
| Item | Tax year 2026 | Tax year 2027 |
|---|---|---|
| Standard deduction, married filing jointly | $32,200 | $33,200 |
| Maximum child tax credit (refundable portion) | $2,200 ($1,700) | $2,300 ($1,800) |
| Personal exemption | $0 | $0 |
| Annual gift exclusion | $19,000 | $20,000 |
| Annual exclusion for gifts to a non-US citizen spouse | $194,000 | $201,000 |
| Estate basic exclusion amount | $15,000,000 | $15,480,000 |
| Foreign earned income exclusion | $132,900 | $137,300 |
What are the 2027 income tax thresholds?
According to IR-2026-133, the 2027 rate schedules keep 7 rates, from 10% to 37%. The following 4 thresholds apply for tax year 2027:
- Single filer brackets: The rate is 10% on income of $12,800 or less, 12% over $12,800, 22% over $52,025, 24% over $109,125, 32% over $208,325, 35% over $264,550, and 37% over $661,375.
- Married filing jointly brackets: The rate is 10% on income of $25,600 or less, 12% over $25,600, 22% over $104,050, 24% over $218,250, 32% over $416,650, 35% over $529,100, and 37% over $793,650.
- Standard deduction: According to the IRS, the 2027 standard deduction is $16,600 for single taxpayers and married individuals filing separately, $33,200 for married couples filing jointly (up $1,000 from 2026), and $24,925 for heads of household.
- AMT exemption: According to the release, the 2027 AMT exemption is $93,000 for unmarried individuals, phasing out at $515,950, and $144,700 for married couples filing jointly, phasing out at $1,031,900.
What do the 2027 adjustments mean for US expats?
None of the 2027 thresholds apply to the return filed in 2027. That return covers tax year 2026, so it uses the 2026 brackets, the 2026 standard deduction ($32,200 for joint filers) and the other 2026 amounts. According to IR-2026-133, the 2027 figures generally appear on returns filed in 2028.
For income tax, the inflation-adjusted bracket thresholds and standard deduction apply to income earned in 2027. Because these figures are set nationally, they apply to Americans abroad in the same way as to taxpayers in the US.
Example: A married couple filing jointly who take the standard deduction can deduct $33,200 for 2027, compared with $32,200 for 2026, a difference of $1,000.
For families, the IRS reports that the maximum child tax credit rises to $2,300 for 2027, and the refundable portion rises to $1,800. Each amount is up $100 from 2026.
For gifts, the release sets the general annual gift exclusion at $20,000 for calendar year 2027, up from $19,000. For mixed-nationality couples, the annual exclusion for gifts to a spouse who is not a US citizen rises to $201,000, up from $194,000 for 2026.
For estate planning, the release sets a basic exclusion amount of $15,480,000 for estates of decedents who die during 2027, up from $15,000,000 for 2026.
The foreign earned income exclusion is also adjusted. According to IR-2026-133, it rises to $137,300 for tax year 2027, an increase of $4,400 from $132,900 for 2026. TFX's guide to the foreign earned income exclusion explains who qualifies and how the exclusion is claimed.
The 2027 rate schedules also apply to nonresident aliens' income taxed at graduated rates on Form 1040-NR. IR-2026-133 does not address nonresident aliens specifically.
What is still unknown?
These 3 points remain unclear from the sources checked:
- Foreign housing exclusion figures: IR-2026-133 does not give the 2027 housing base amount or limits. Those figures may appear in Rev. Proc. 2026-35 or later IRS guidance, but they have not been verified for this article. TFX's guide to the foreign housing exclusion explains how the exclusion works.
- Country and city housing adjustments: The 2027 housing-cost adjustments for specific high-cost locations have not been published in the sources checked.
- Some year-over-year comparisons: The figures verified for this article do not include the 2026 single-filer or head-of-household standard deduction, the 2026 bracket thresholds or the 2026 AMT exemption. For that reason, this article does not state how much those amounts changed.
What should you do now?
The following 4 steps can help:
- Use the 2026 figures for the return you file in 2027. That return covers tax year 2026, so the 2026 brackets, the 2026 standard deduction, and the other 2026 thresholds, including the $132,900 foreign earned income exclusion, apply.
- Plan 2027 income against the new thresholds. Salary, bonuses, and relocations in 2027 will be measured against the 2027 brackets, the 2027 standard deduction, the AMT exemption, and the $137,300 exclusion limit.
- Check planned 2027 gifts against the new exclusions. The general annual gift exclusion is $20,000 for calendar year 2027, and the annual exclusion for gifts to a non-US citizen spouse is $201,000.
- Review your estate plan against the 2027 exclusion. The basic exclusion amount for estates of decedents who die during 2027 is $15,480,000.
FAQ
According to IRS news release IR-2026-133, the tax year 2027 amounts generally apply to tax returns filed in 2028. Returns filed in 2027 cover tax year 2026 and use the 2026 figures.
The 2027 schedules keep 7 rates, from 10% to 37%. The 37% rate applies to income over $661,375 for single filers and $793,650 for married couples filing jointly, and the 10% rate applies to income of $12,800 or less ($ 25,600 (married filing jointly).
For tax year 2027, the standard deduction is $16,600 for single taxpayers and married individuals filing separately, $33,200 for married couples filing jointly, and $24,925 for heads of household, according to the IRS.
For calendar year 2027, the annual gift exclusion is $20,000, and the annual exclusion for gifts to a spouse who is not a US citizen is $201,000. Estates of decedents who die during 2027 have a basic exclusion amount of $15,480,000.
Yes. According to IR-2026-133, the foreign earned income exclusion is $137,300 for tax year 2027, up from $132,900 for 2026. TFX's guide to the foreign earned income exclusion explains who qualifies.
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