A gap in federal inflation data caused by the 2025 government shutdown has raised questions about how the IRS will set 2027 tax figures, but tax professionals and analysts told Checkpoint the missing month should matter little for most taxpayers.
Each year, the IRS adjusts dozens of tax parameters, including bracket thresholds, the standard deduction, and a range of credits and phaseouts, to keep pace with inflation. Under IRC § 1(f), those adjustments are generally tied to the average chained Consumer Price Index for All Urban Consumers, or C-CPI-U, for the 12-month period ending August 31.
The agency would ordinarily have a full 12-month series of inflation numbers, but the shutdown left the Bureau of Labor Statistics (BLS) unable to publish October 2025 data. BLS stated data it could not collect during the lapse in appropriations cannot be recovered after the fact, so affected figures are permanently suppressed from publication.
Checkpoint has published 2027 projections using the 11 available months. The IRS did not respond to Checkpoint’s request for comment on how it will calculate the adjustments.
A small effect, larger stakes
James Creech, a principal in Baker Tilly’s specialty tax practice, said he is “not overly concerned about the difference between using 11 months of inflation data and 12 months,” particularly if the absent month tracked those around it. His larger worry is that an incomplete data set “potentially creates greater latitude in how the missing information is interpreted.”
Indexing matters, Creech explained, because without it taxpayers can face higher effective tax burdens when nominal income rises only because of inflation. He pointed to the alternative minimum tax, which for years was not adequately indexed and eventually reached well beyond the high earners it was meant for. The direction of any error cuts both ways, he said: an adjustment higher than true inflation generally helps taxpayers, while one that runs low can produce bracket creep.
Small percentage differences also grow with the size of the indexed figure. The estate and gift tax exemption was $13.99 million per person in 2025 and $15 million in 2026, where a one-percentage-point difference represents roughly $150,000. The missing data would not come close to that, Creech said, but it shows how minor differences matter for the largest provisions.
A wrinkle in the housing numbers
Andrew Phillips, an EY principal and the firm’s Americas Quantitative Economics & Statistics (QUEST) Leader, focused on the statute’s mechanics, which compare the average of this year’s index values with the average in a base period rather than a simple year-over-year change. Because October falls near the start of the reference window and prices generally climb month to month, he said, “dropping out October would slightly bias the average upward,” an effect that on its own modestly favors taxpayers.
The more consequential issue, in his view, is how the shutdown affected later readings. Housing makes up about a third of the index and is measured on a rolling six-month basis; for October, BLS assumed no price change, which held down the housing component into the spring. That, Phillips said, “may have a material impact” on measured inflation over those months. If the net effect lowers the adjustment, it would trim the rise in brackets, deductions, and credits, which he said “could be equated to a small increase in taxes” relative to a shutdown-free year.
What the numbers show
Stephanie Hingtgen, a senior research analyst at the Center on Budget and Policy Priorities, expects the IRS to use the published figures that omit October. Compared with a scenario in which BLS filled in the month by averaging the September and November values, she estimates that leaving it out yields a slightly higher adjustment for some provisions, which is “generally more favorable for taxpayers because more of their income may be taxed at lower rates.”
The size of the effect depends on the provision, its rounding rules, and when it took effect, she said. By her estimate, the maximum Child Tax Credit lands at $2,300 either way, while the income threshold for the 12% bracket for joint filers comes in $50 higher under the omit approach, at $25,600 versus $25,550 had October been interpolated.
Taken altogether, the assessments largely converge: each expects the lost month, on its own, to nudge adjustments slightly upward and leave most 2027 tax bills little changed. As Creech put it, since “inflation appears to have been relatively consistent around the missing October period, I would not expect using 11 months rather than 12 to have a significant impact for most individual taxpayers, although even small differences can become meaningful when applied to larger indexed provisions.”
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