Key Takeaways
Federal income tax rates for 2027 remain at 10%, 12%, 22%, 24%, 32%, 35%, and 37%. The bracket thresholds have been adjusted for inflation.
The 2027 standard deduction is $16,600 for single filers, $33,200 for married couples filing jointly, and $24,925 for heads of household.
These amounts apply to tax year 2027, meaning returns filed in 2028.
Mobility and payroll teams should use the 2027 figures for gross-up and withholding calculations on relocation benefits paid in 2027.
IRS Announces Tax Inflation Adjustments for 2027
Today, the IRS announced inflation adjustments for several tax provisions for tax year 2027. First, the 2027 Federal income tax rates are unchanged but the brackets have been adjusted for inflation. Here are the 2027 tax brackets and rates for those filing single or married filing jointly:
37% for incomes over $661,375 ($793,650 for married couples filing jointly);
35% for incomes over $264,550 ($529,100 for married couples filing jointly);
32% for incomes over $208,325 ($416,650 for married couples filing jointly);
24% for incomes over $109,125 ($218,250 for married couples filing jointly);
22% for incomes over $52,025 ($104,050 for married couples filing jointly);
12% for incomes over $12,800 ($25,600 for married couples filing jointly);
10% for incomes $12,800 or less ($25,600 or less for married couples filing jointly).
Standard deductions have also been increased for 2027 from $16,100 to $16,600 if single or married filing separately, from $32,200 to $33,200 if married filing jointly, and from $24,150 to $24,925 if head of household. Personal exemptions remain at $0. The child tax credit has also increased from $2,200 to $2,300.
2027 Federal Income Tax Brackets at a Glance
| Rate | Single | Married Filing Jointly |
|---|---|---|
| 10% | $0 – $12,800 | $0 – $25,600 |
| 12% | $12,801 – $52,025 | $25,601 – $104,050 |
| 22% | $52,026 – $109,125 | $104,051 – $218,250 |
| 24% | $109,126 – $208,325 | $218,251 – $416,650 |
| 32% | $208,326 – $264,550 | $416,651 – $529,100 |
| 35% | $264,551 – $661,375 | $529,101 – $793,650 |
| 37% | Over $661,375 | Over $793,650 |
Source: IRS Revenue Procedure 2026-35. Applies to tax year 2027 (returns filed in 2028).
Standard Deduction: 2026 vs. 2027
| Filing Status | 2026 | 2027 |
|---|---|---|
| Single / Married Filing Separately | $16,100 | $16,600 |
| Married Filing Jointly | $32,200 | $33,200 |
| Head of Household | $24,150 | $24,925 |
Source: IRS Revenue Procedure 2026-35.
What the 2027 Tax Brackets Mean for Relocation Tax Gross-Ups
Most relocation benefits, such as house-hunting trips and temporary living, are taxable income to the transferee. When an employer grosses up those benefits, the calculation depends on the transferee’s tax rates. A common formula is tax rate / (1 – tax rate), applied to the nondeductible reimbursement so the gross-up also covers the tax on the gross-up itself.
Many programs take a more precise approach. They calculate what the transferee’s federal, state, FICA, and local taxes would have been without the move, then compare that to the actual taxes with the move. Because both calculations depend on bracket thresholds and the standard deduction, the 2027 adjustments change the result. A transferee whose relocation benefits push them across a bracket threshold will face a different marginal rate than one who stays within a bracket.
Before the first 2027 moves are paid, confirm that your gross-up calculations, payroll system, and any relocation partners are using the 2027 brackets, standard deductions, and FICA wage base. For more on how relocation tax gross-ups work, see our 2026 Mobility Tax Guide.
Frequently Asked Questions
When do the 2027 tax brackets take effect?
The 2027 brackets and standard deductions apply to income earned in tax year 2027, beginning January 1, 2027. Taxpayers will use them when filing their 2027 returns in 2028.
Should 2027 relocation gross-ups use the 2027 tax brackets?
Generally, relocation benefits are taxed in the year they are paid to or on behalf of the transferee. Benefits paid in 2027 should be grossed up using 2027 figures. Benefits paid in December 2026 still fall under 2026 figures, even if the move continues into the new year.
How does the 2027 standard deduction increase affect relocation gross-up calculations?
For programs that compare a transferee’s taxes with and without the move, a higher standard deduction lowers taxable income in both calculations. That can change where the transferee’s income falls relative to the bracket thresholds, which affects the marginal rate used for the gross-up.
What should payroll update before the first 2027 relocation payments?
Payroll and mobility teams should confirm that the 2027 federal brackets, standard deductions, and FICA wage base are loaded before January 1, 2027. They should also confirm that any partners calculating gross-ups on their behalf are working from the same figures.
For more detailed information on all the changes, please see IRS Revenue Procedure 2026-35.
About the Author
Quentin Hormel is Director of Payroll & Tax at Orion Mobility, with 30 years of experience in payroll and tax. He writes Orion’s tax alerts on changes affecting relocation gross-ups, payroll, and mobility programs.
