Government Shutdown Obscured 2025 Inflation Data

The IRS is adapting 2027 tax projections after a 2025 shutdown halted key inflation reporting.

Updated on Sept. 24, 2026 in Taxes

Bold flat-color editorial illustration showing a large brass pendulum bob, symbolizing fiscal balance and tax adjustment, on a cream background. — The IRS is recalculating tax parameters for 2027 after a 2025 government shutdown caused the loss of crucial inflation data. AI Illustration. Upload story photo >

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A government shutdown in October 2025 prevented the Bureau of Labor Statistics from publishing essential inflation data. This interruption complicated how the IRS calculates annual tax parameter adjustments for the 2027 tax year.

Why it matters

The IRS relies on a specific 12-month average of the C-CPI-U, ending August 31, to adjust tax thresholds for inflation and prevent bracket creep. Because the shutdown prevented the recovery of October 2025 figures, the agency must set future tax figures using the remaining available data.

The IRS has adjusted the estate and gift tax exemption to $15 million for 2026, up from $13.99 million in 2025. Projections for 2027 include a $2,300 maximum Child Tax Credit and a $25,600 income threshold for the 12% tax bracket for joint filers.

The players

Internal Revenue Service

The federal agency responsible for administering tax laws and annually adjusting tax brackets and exemptions for inflation.

Bureau of Labor Statistics

The government agency responsible for calculating and publishing inflation metrics like the C-CPI-U.

The details

The IRS adjusts tax parameters by measuring the average 12-month C-CPI-U index ending each August 31. This index tracks housing on a rolling six-month basis to determine annual cost-of-living updates. With the October 2025 data lost during the appropriations lapse, the agency is calculating these necessary adjustments using the remaining 11 months of verified information to maintain the annual indexing process.

October 2025: Government shutdown prevented inflation data collection.
August 31: Annual cutoff for the 12-month inflation adjustment calculation period.
2027: Tax year for which current inflation adjustments are being determined.

Money Landscape

The standard C-CPI-U annual inflation indexing serves as the backbone for maintaining real-dollar value in tax brackets and credits. The 2025 data gap creates a rare administrative challenge in the historical range of annual tax adjustments.

These shifts influence the standard deduction, tax brackets, and credit thresholds that define your tax liability in 2027. Households should review these projected figures with a tax professional to anticipate how their potential tax obligations may change.

The takeaway

The IRS is proceeding with 2027 tax planning despite the lack of a full year of inflation data. Taxpayers should consult with a qualified professional to discuss how these projected adjustments might influence their specific financial strategy for the coming years.