The 37% federal income tax rate will begin at taxable income above $661,375 for single filers and $793,650 for married couples filing jointly in 2027, the IRS said Nov. 5 in announcement IR-2026-133. Both lines sit higher than in 2026, when the top rate began above $640,600 for single filers and $768,700 for joint filers. The new thresholds generally apply to returns filed in 2028.
The line is drawn on taxable income, which is what remains after deductions, so it is not the same as a salary figure. Only the dollars above the threshold are taxed at 37%, and everything below is taxed at the lower rates stacked underneath it. Anyone whose 2027 taxable income could land near $661,375 or $793,650, from a bonus, a business sale or stock compensation, is the reader this adjustment touches.
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How far did the top-rate line move?
For single filers it rose $20,775, from the $640,600 the IRS set for 2026 to $661,375. For joint filers it rose $24,950, from $768,700 to $793,650. Both work out to about 3.2 percent. Heads of household, a status the announcement does not list, begin the 37% rate above $661,350 under Revenue Procedure 2026-35, up from $640,600.
The step has a concrete dollar value. Income between the old and new lines is taxed at 35% under the 2027 schedule and would have been taxed at 37% under the 2026 lines. On the $20,775 that separates the two single-filer lines, the two-point difference comes to roughly $416, and on the $24,950 joint gap it is about $499.
Running the same income through both schedules shows what the move is worth. Under Revenue Procedure 2026-35, a single filer with $700,000 of taxable income owes $213,529 for 2027, which is $199,237.75 at the line plus 37% of the $38,625 above it. The 2026 schedule would have charged $214,957.25, so the difference is $1,428.25. For a joint filer with $900,000 the figures are $252,640 and $255,164.50, or $2,524.50 less.
Why is a couple’s line not double a single filer’s?
The joint threshold is $793,650, which is 1.2 times the single threshold. The same ratio held in 2026, when $768,700 was 1.2 times $640,600. The result is that two unmarried people can each earn up to $661,375 of taxable income, $1,322,750 between them, before either reaches 37%, while a married couple filing jointly reaches it at $793,650.
That gap is the marriage penalty at the top of the schedule, and the 2027 numbers leave its shape unchanged. It bites when both spouses earn heavily. A couple where one spouse earns nearly everything is better off filing jointly, since the joint line of $793,650 sits above the single line of $661,375.
Married people who file separately reach 37% at $396,825 for 2027, exactly half the joint line and up from $384,350 in 2026, so spouses who file apart give up the room the joint threshold would have given them.
What sits just below the 37% line?
The 35% rate begins above $264,550 for single filers and $529,100 for joint filers in 2027, up from $256,225 and $512,450 in 2026, according to the revenue procedure. That makes the 35% band $396,825 wide for single filers and $264,550 wide for joint filers.
The 32% rate starts higher too. It begins above $208,325 for single filers and $416,650 for joint filers, compared with $201,775 and $403,550 for 2026. A taxpayer deciding whether to bring income into 2027 or push it to 2028 has to look at which of these lines the extra dollars would cross.
Where does the 20% rate on long-term gains begin?
For high earners, the ordinary-income line is not the only one that matters. The revenue procedure sets the top of the 15% rate on long-term capital gains at $563,200 for unmarried filers and $633,600 for joint filers in 2027, up from $545,500 and $613,700. Gains above those amounts are taxed at 20%.
Both lines fall below the 37% thresholds, $661,375 for single filers and $793,650 for joint filers. That means a taxpayer with large gains can reach the 20% rate on them before reaching the top rate on wages, and a year with a big sale can bring both lines into play at once.
Does the top bracket still trim itemized deductions?
It does, the IRS says in the announcement. The limitation on itemized deductions was eliminated for tax years 2018 through 2025, and the Working Families Tax Cuts made that elimination permanent. The IRS adds that a limitation still applies to “the tax benefit from itemized deductions for those taxpayers in the highest tax bracket (37%).”
The announcement also states that personal exemptions remain at zero for 2027, as in 2026. Those notes sit beside the schedule changes in the same announcement, which also raises the standard deduction and the child tax credit.
The 2027 lines cover income earned next year. The return filed this coming spring for 2026 still uses the lines of $640,600 and $768,700, which the IRS said last October apply to returns filed in 2027. A taxpayer with some say over when a bonus, a sale or an exercise of stock options lands has until the end of next year to see which schedule it falls under.
Heading toward the 35% or 37% line in 2027?
A year when taxable income jumps, from a large bonus, an inheritance, a sale or an IRA conversion, can push dollars across a bracket line that did not matter in the years before. The 2027 lines above are the ladder those dollars climb, and where a filer stops on it sets the bill.
The Roth Conversion Window is a 16-page guide to converting part of an IRA to a Roth, and it includes filling the bracket, and stopping at the line. It also carries a room finder and a multi-year planner worksheet. The turn is plain: it is built for people near or in retirement, and the 37% line is the top rung of the ladder it works on.
Get the guide to filling a tax bracket and stopping at the line →
This article was produced with AI assistance and edited for accuracy against the sources linked above.
Warren Cohen is a finance writer based in Phoenix, Arizona, covering personal finance topics including credit, banking, and beginner investing. He earned his degree in business administration from Arizona State University and began his career working in consumer finance, where he gained direct experience with lending and credit systems. He now writes for personal finance websites and fintech platforms, focusing on clear, practical content that helps readers make informed financial decisions.
