Your tax brackets go up 3.2% next year. Inflation ran 3.4%.

The 2017 tax law rewrote the indexing rule in Section 1(f)(3) of the code to use the Chained Consumer Price Index, the C-CPI-U, in place of the regular CPI-U, for tax years beginning after December 31, 2017. The index swap carried no expiration date, and it is the reason your brackets move 3.2% in a year prices moved 3.4%.

The difference between the two indexes is substitution. Chained CPI assumes that when beef gets expensive you buy more pork, and it recalculates its weights monthly to capture that. Regular CPI holds the basket steadier. BLS puts the average gap between the two at roughly 0.2 percentage points a year, measured December to December from 2001 to 2023, and notes it can occasionally run the other way, as it did in January 2023. Congress's Joint Committee on Taxation scored the switch at about $134 billion of additional federal revenue over ten years, which tells you the gap is small per person and enormous in aggregate.

Thomson Reuters Checkpoint, also on September 11, put projected 2027 numbers against the official 2026 ones the IRS set in Revenue Procedure 2025-32. The standard deduction goes to $33,200 for married couples filing jointly, from $32,200. Single filers go to $16,600 from $16,100. Head of household goes to $24,900 from $24,150. So a thousand dollars more of tax-free income for a couple, five hundred for a single filer.

The brackets shift underneath that. For a married couple, the 10% band is projected to top out at $25,600 instead of $24,800, and the 12% band at $104,050 instead of $100,800, a $3,250 raise on that ceiling.

Run a real case through it, because the arithmetic answers the question most people actually have. A couple with $100,000 of taxable income in 2026 owes $2,480 on the first $24,800 and 12% on the rest, for $11,504. Give them a 3.4% raise to $103,400 and drop them into the projected 2027 table: $2,560 plus 12% of $77,800, for $11,896. Effective tax rate, both years, 11.50%. Indexing did its job. A raise that merely keeps up with prices does not move you backward, and even when a raise does cross a bracket line, only the dollars above that line get taxed at the higher rate.

More than sixty provisions in the code get a cost-of-living bump every year. A handful get none, and those are where inflation does real damage, because 0% is a much worse deal than 3.2%.

Start with the capital loss deduction. You can use losses to offset gains without limit, plus $3,000 against ordinary income. Congress set that $3,000 in 1978 and has never raised it. Not once in 48 years. It has lost close to 79% of its purchasing power, and the equivalent of that original allowance is somewhere around $14,400 in today's money. Every bad year in a taxable brokerage account gets written off at 1978 scale.

Then there is the one that catches retirees. Whether your Social Security benefits are taxed depends on combined income crossing $25,000 if you are single or $32,000 filing jointly, with a second tier at $34,000 and $44,000 where up to 85% of benefits become taxable. Those thresholds were set in 1984, adjusted once in 1993, and never indexed. Meanwhile the benefits themselves get a cost-of-living adjustment every single year. The COLA is designed to keep retirees even with prices, and one of the things it reliably does is walk them across a line that has not budged since 1993.

First, hold the projections loosely. Bloomberg Tax and Thomson Reuters are both working from published CPI data, not guessing, but the IRS has not released the official 2027 figures yet and typically does so in October or November. There is an extra wrinkle this cycle: Thomson Reuters built its estimates from eleven months of CPI readings, September 2025 through August 2026, because the October 2025 index was never published during the government shutdown. Expect the final numbers to be very close. Do not sign anything irreversible against an estimate.

Second, check your withholding now rather than in December. Three months is enough runway to fix an under-withholding problem by adjusting a W-4; the second week of April is not. If your income changed this year, if you picked up a second job, or if you have not looked at your W-4 since you got married or had a kid, that is the single highest-value thirty minutes available to you this quarter.

Third, use the projected standard deduction as a decision point. At $33,200 for a couple, itemizing has to clear a higher bar than it did last year, and the bar rises again every year. If you were close to the line in 2026, bunching two years of charitable giving or deductible expenses into one calendar year is the standard way to get over it. And if you are sitting near one of the frozen thresholds, especially a retiree close to $32,000 of combined income, that is the number to plan the year around. It is the one the code will not move for you.