Rev. Proc. 2026-35: 2027 37% Bracket Starts at $661,375 Single, $793,650 Joint; Standard Deduction $33,200

What the document is

IR-2026-133 is dated November 5, 2026. It says the IRS “announced the tax year 2027 annual inflation adjustments for almost 70 tax provisions” and that the adjustments “generally apply to tax returns filed in 2028.” The details are in Revenue Procedure 2026-35, whose table of contents runs from section 3.01 (tax rate tables) to section 3.68 (small employer health reimbursement arrangements). Section 4.01 applies it to taxable years beginning in 2027, so income you take before December 31, 2026 is still taxed under the 2026 tables in our 2026 brackets page.

Only one item in section 2 (“Changes”) is new law: Pub. L. 119-21 section 70431 amended IRC 1202(b), and the amounts there are now indexed for years beginning after 2026 (section 3.42, covered in our QSBS page). The rate tables were made permanent by Pub. L. 119-21 section 70101 (Rev. Proc. 2025-32 section 2.01), so the 2027 table is an inflation reset of the 2026 one with the same seven rates. One detail of the posted file: section 1 still reads “as in effect on [Release Date, 2026]”, a placeholder in the IRS PDF that we saw on November 6, 2026. It also says taxpayers should consult additional guidance if Congress amends the Code for 2027 after that date.

The 2027 brackets next to 2026

In 2027 the 37% bracket starts at $793,650 of taxable income for a joint return and $661,375 for a single filer. Each cell below is the taxable income over which the rate starts in 2027, with the 2026 figure in brackets. The rates are 10%, 12%, 22%, 24%, 32%, 35% and 37% in both years.

Source: Rev. Proc. 2026-35 section 3.01, Tables 1 to 4; 2026 figures from Rev. Proc. 2025-32 section 4.01. The procedure states each table as a tax formula by range of taxable income; we show where each rate starts. The head-of-household 37% line is $25 below the single line in 2027 ($661,350 against $661,375); in 2026 the two were equal at $640,600.

The 37% bracket start rises $24,950 on a joint return (3.2%) and $20,775 on a single return (3.2%), and the standard deduction rises 3.1% (our arithmetic). For estates and trusts (Table 5) the rates start at 24% over $3,400, 35% over $12,100 and 37% over $16,500, against $3,300, $11,700 and $16,000 in 2026; our trust brackets page works through the rental-income case.

Standard deduction and the other personal amounts

Source: Rev. Proc. 2026-35 sections 3.02, 3.12 and 3.15; Rev. Proc. 2025-32 sections 4.02, 4.11 and 4.14. For the kiddie tax, a parent may elect to report a child’s income only if the child’s gross income for 2027 is “more than $1,400 but less than $14,000” (section 3.02).

A $250,000-plus household meets this table in two places. The standard deduction is what most itemizers compare against, and the kiddie tax matters when a child or grandchild owns a fund share that pays a distribution.

Same income, two years: what the 2027 tables save

The comparison most readers want is what the new table does to a return whose income does not change. The table taxes the same ordinary income (wages, interest, rent, BDC dividends) under both years’ tables with each year’s standard deduction. It is our arithmetic and ignores credits, adjustments, itemizing, state tax and the NIIT.

Source: our arithmetic on Rev. Proc. 2026-35 sections 3.01 and 3.15 and Rev. Proc. 2025-32 sections 4.01 and 4.14. The saving is the same income taxed two ways; income that grows with inflation will use up some or all of it.

The savings are small because the brackets move about 3.2% and a taxpayer whose pay rises 3% ends up in about the same place. Where a household’s income is flat or falling, such as rental income under a fixed lease or a fund distribution that is cut, the table is a real reduction.

Where the 37% bracket starts in AGI terms

The 37% line is expressed in taxable income. Add the standard deduction to see where it starts in AGI when all income is ordinary (our arithmetic):

Source: our arithmetic: 2027 bracket start from Rev. Proc. 2026-35 section 3.01 plus standard deduction from section 3.15; 2026 from Rev. Proc. 2025-32 sections 4.01 and 4.14.

How much room is left in your 2027 bracket

Same simplification as above: all income ordinary, standard deduction taken, no credits or adjustments. “Room” is how much more ordinary income fits before the next rate starts in 2027 (our arithmetic on sections 3.01 and 3.15).

Joint return

Single filer

A joint return at $250,000 of AGI, which is where the 3.8% NIIT starts, is in the 22% bracket in 2027 with $1,450 of room before 24%; in 2026 the same return was at $217,800, already past the 24% line of $211,400. Single filers have a short 32% bracket: $208,325 to $264,550 of taxable income, a span of $56,225.

The rate on fund income, and $100,000 stacked in 2027

The bracket rate applies to ordinary income. A BDC distribution paid from interest income and ordinary K-1 income are taxed at it, a non-traded REIT dividend gets the 20% deduction in IRC 199A(b)(1)(B), and qualified dividends and long-term gain have their own rate table (see the 2026 brackets page for the classification of each kind of income). The table adds $100,000 of each type on top of the taxable income shown and includes the 3.8% NIIT on the full $100,000. In all four starting points MAGI is already at least $100,000 over the NIIT threshold, so the tax applies to the whole amount. Our arithmetic:

Source: our arithmetic on Rev. Proc. 2026-35 sections 3.01, 3.03 and 3.15, IRC 199A(b)(1)(B) and 1411. Each cell is income tax plus $3,800 of NIIT. Qualified dividends and gain are taxed at 15% up to the 2027 breakpoint of $633,600 joint and $563,200 single and 20% above it. The REIT column assumes the 20% deduction is not cut back by the taxable-income limit in 199A(a)(2).

Crossing the 37% line is the small step. A joint return at $700,000 of taxable income has $93,650 of room at 35% in 2027. If it adds $150,000 of BDC dividends, $93,650 is taxed at 35% and $56,350 at 37%: $53,627 of income tax, of which the two extra points on the top part are $1,127, plus $5,700 of NIIT on the $150,000 (our arithmetic).

Alternative minimum tax in 2027 (section 3.11)

The AMT exemption is indexed and, for taxpayers with high AMT income, phased out. 2027 against 2026:

Source: Rev. Proc. 2026-35 section 3.11; 2026 from Rev. Proc. 2025-32 section 4.10. The 28% rate applies above $252,500 of AMT base in 2027 ($126,250 if married filing separately), against $244,500 and $122,250 in 2026.

Two things stand out. First, the 2026 joint phase-out start of $1,000,000 was fixed by the 2025 law; Rev. Proc. 2025-32 section 2.07 says the amount “is not adjusted for inflation for any taxable year beginning before January 1, 2027”, so 2027 is the first year it moves, to $1,031,900. Second, the distance from the phase-out start to the point where the exemption is zero is exactly twice the exemption: $289,400 on a joint return for a $144,700 exemption, and $186,000 for a $93,000 single exemption. That means the exemption falls by 50 cents for each dollar over the start (our arithmetic), and our 2026 AMT page explains the law behind it and what triggers AMT for an investor.

Worked case (our arithmetic): a joint filer with $1,200,000 of AMT income has an exemption left of $60,650 in 2027 ($144,700 less 50 cents on the $168,100 over $1,031,900), against $40,200 in 2026. The tentative minimum tax is $313,968 in 2027 against $319,854 in 2026. For a single filer with $600,000 of AMT income the exemption left is $50,975 against $40,100 and the tentative minimum tax is $148,677 against $151,882. Those are tentative figures before the comparison with your regular tax, which is what decides whether any AMT is owed.

Section 199A in 2027 (section 3.28)

The 20% deduction for qualified business income has income thresholds that are indexed, and a new minimum deduction.

Source: Rev. Proc. 2026-35 section 3.28; Rev. Proc. 2025-32 section 4.26 for the 2026 thresholds. The 2026 minimum deduction and minimum income are the statutory amounts in IRC 199A(i), which are indexed for years after 2026.

How the thresholds work for a K-1 investor (our reading of IRC 199A; a tax professional should confirm it against your return). Below the threshold, a business-income deduction is 20% of qualified business income, limited by 20% of taxable income less net capital gain. Above the threshold, the W-2 wage and property limits and the exclusion of specified service businesses phase in over the range, which is $150,000 wide on a joint return ($566,600 less $416,600) and $75,000 wide for other returns. A joint return with $500,000 of taxable income is 55.6% of the way through the range in 2027, and a single return with $230,000 is 28.9% of the way (our arithmetic). The deduction for qualified REIT dividends is different: IRC 199A(b)(1)(B) allows “20 percent of the aggregate amount of the qualified REIT dividends and qualified publicly traded partnership income.” On $100,000 of qualified REIT dividends the deduction is $20,000, worth $7,400 at the 37% rate (our arithmetic). Our 199A dividends page shows where it appears on the Form 1099-DIV and our Form 8995 page covers rental property.

The new $415 minimum deduction is narrower than it sounds. The statute counts only a “qualified trade or business of the taxpayer in which the taxpayer materially participates” (IRC 199A(i)(2)(B)), so in our reading a passive K-1 rental interest does not count toward it.

The rest of the document, and where it is covered

Rev. Proc. 2026-35 is the source for several amounts a high-income household also needs. We give the 2027 figure and send the detail to a page of its own.

Source: Rev. Proc. 2026-35 sections 3.03, 3.33, 3.41, 3.42, 3.44 and 3.46 and IR-2026-133; 2026 amounts from Rev. Proc. 2025-32 and IR-2026-133. The 2026 section 1202 amounts are the statutory figures before indexing.

The capital-gain breakpoints are worked through for a rental sale and the NIIT in our 2027 capital gains page, and the estate and gift amounts in our 2027 estate and gift page. The 2026 versions are in our estate tax exemption page, excess business loss page and QSBS page.

What is not in this revenue procedure

Rev. Proc. 2026-35 has 68 numbered items and none of them is a retirement plan or Medicare amount. The 401(k) elective-deferral limit and the IRA limits are set in an annual IRS notice; as of November 6, 2026 we had not found it, and the figures in circulation are projections, not IRS numbers. The 2027 Medicare Part B premium and the income-related (IRMAA) brackets come from CMS and were not out on that date; our 2026 IRMAA page has the 2026 table. The 2026 retirement-plan limits are in our contribution limits page.

Also absent are the amounts that Congress wrote into the statute without indexing. The 3.8% NIIT applies above $250,000 of MAGI on a joint return and $200,000 in any other case, and section 1411(b) writes those dollar amounts in the statute; the procedure does not mention section 1411. Our NIIT page explains why a fixed threshold reaches more returns each year. The senior deduction added by the 2025 law is not an inflation-adjusted item in this document either (see our senior deduction page); IR-2026-133 lists personal exemptions at zero and states that the limit on itemized deductions for the 37% bracket remains.

What a reader can do with this

• Find your 2027 line, not your 2026 one. Take projected 2027 taxable income and locate it in the room table. A household with a flat income has $689 to $2,894.50 less tax in our joint examples; one with 3% more income is about where it was.
• Check which side of $826,850 or $677,975 of AGI you are on if you plan a large 2027 event such as a sale, a Roth conversion or a lump-sum distribution. The stacking table shows what $100,000 of each type of fund income costs from four starting points.
• Keep the NIIT in the picture. The thresholds are not part of this procedure and do not rise, so every dollar of fund income above them carries the extra 3.8% whatever the bracket does. The estimated tax page covers the January 15 payment and the year-end calendar the dates before December 31.
• Do not plan 2027 retirement contributions or Medicare costs from this page. Wait for the IRS notice and the CMS announcement.
• Ask a tax professional the specific question. The tables use the standard deduction and ordinary income; your return has credits, itemized deductions and state tax that change the answer.

This is analysis of public documents, not investment, legal or tax advice.

FAQ

Sources, read and saved on November 6, 2026: IRS Revenue Procedure 2026-35 (PDF from irs.gov/pub/irs-drop/rp-26-35.pdf: sections 1, 2.01, 3.01, 3.02, 3.03, 3.11, 3.12, 3.15, 3.28, 3.33, 3.41, 3.42, 3.44, 3.46 and 4.01); IRS news release IR-2026-133 of November 5, 2026; IRS Revenue Procedure 2025-32 (2026 amounts: sections 2.07, 2.12, 4.01 to 4.03, 4.10, 4.11, 4.14, 4.26 and 4.31); Internal Revenue Code sections 199A and 1411 (Cornell LII). Every dollar amount of tax, room, saving and exemption left at a given income is our arithmetic, except where the document is cited.