Every fall brings a fresh set of inflation-adjusted figures that shape how much your employees keep in their paychecks and how much they can save for the future. The early projections for 2027 (still projections!) are starting to circulate, and while the IRS won’t confirm official numbers until later this fall, we wanted to share a few of the things we’re watching.
If the projections hold, most employees will likely see a slightly larger paycheck in 2027. That’s no small thing on payday, people will notice. It could even be a nice opening for conversations about their options.
Looking out at the horizon
All seven federal tax brackets are expected to rise about 3.2%, a bit more than this year’s 2.7% adjustment. Employees can earn a little more before any given dollar is taxed at a higher rate. Technically, it’s the code’s way of guarding against bracket creep, where a cost-of-living raise pushes someone into a higher bracket with no reward to the employee. The standard deduction is projected to rise, too, to roughly $33,200 for married couples filing jointly and $16,600 for single filers.
On the retirement side, things are drifting upward. The employee contribution limit for 401(k), 403(b), and 457 plans looks likely to move from $24,500 toward the $25,000 – $25,500 range, and the catch-up options for older employees should offer more chances to save as retirement approaches.
Again…these are still projections. The forecasts for these changes are pretty much always on track. Even last year, estimates were really close to the final IRS numbers. But, obviously, speculation isn’t helpful to employees or teams.
Employees do care, though
Even if your teams aren’t curious about tax news (though, plenty are), they do notice their paychecks. If the brackets shift as expected, that slightly larger take-home is an opportunity to increase retirement savings. Though, that’s always an individual’s call. But keeping them informed on their options is your job. Could a bit of that go toward retirement?
How to help your teams
None of this calls for turning your team into tax experts. Usually, it’s just about enough context for one or two good decisions. Lead with the paycheck, starting with what employees will actually see and the why. Open enrollment or year end is good timing. Make sure your materials on retirement savings are prepped, too.
For those of you who shape your company’s benefits, these shifts are a natural prompt to revisit a few things. Higher limits are a good reason to check how your match and auto-escalation settings line up, and to consider whether the options you offer still fit your workforce. None of it is urgent, but a little forward thinking now tends to make the new year better.
We see these moments as a chance to show employees that someone is paying attention on their behalf. Like a little extra money in their paycheck, your teams notice that kind of care.
This was just a snapshot; read how the tax brackets are expected to change in detail.
