The potential changes to income tax brackets for 2027 are currently under analysis, with projections suggesting a 3.2% increase in federal tax brackets next year, according to new estimates from Bloomberg Tax. This increase would mean that Americans could earn more before their income is taxed at higher rates. The IRS adjusts its tax brackets annually to account for inflation, which can offer some financial relief to individuals whose income is taxed at lower rates. While the IRS has not yet announced the new inflation-adjusted tax brackets—typically released in October or November—Bloomberg Tax shared its forecast on Friday, using the same inflation measure as the IRS: the "chained Consumer Price Index." The forecast was based on an 11-month average of inflation data, as the Department of Labor did not report October 2025 inflation figures due to a government shutdown. The IRS did not immediately respond to questions about when it plans to release its updated brackets for the upcoming tax season. According to Bloomberg, taxpayers are likely to see income thresholds for the seven IRS tax brackets increase by 3.2% in 2027, up from 2.7% in the current tax year. These changes are important because they help prevent "bracket creep," a situation where people are pushed into higher tax brackets due to inflation, even if their real income hasn’t increased. The larger inflation adjustment comes as prices have risen in 2026, largely due to the Iran war, which has driven diesel prices to over $6 a gallon—setting a record—while gasoline remains above $4 a gallon. August’s Consumer Price Index report showed that inflation rose by a higher-than-expected 3.4% on an annual basis. Without annual inflation adjustments, workers who receive a cost-of-living pay increase could be pushed into a higher tax bracket even if their standard of living hasn’t changed. Under Bloomberg Tax’s projections, the 12% tax bracket for married couples would cover taxable income from $25,601 to $104,050, with the top of that range increasing by $3,250 from 2026. Only the portion of a couple’s income that falls within that range is taxed at 12%, with income below $25,601 taxed at the 10% rate. Single filers will also see their tax brackets adjusted for 2027, according to Bloomberg Tax. The standard deduction will increase next year, rising to $33,200 for married couples filing jointly and $16,600 for single filers. This compares with $31,500 and $15,750, respectively, in the current tax year. These adjustments aim to keep pace with rising living costs and ensure that taxpayers are not unfairly taxed due to inflation.