Will getting married help or hurt your tax rate?
The federal income tax is not neutral when it comes to marriage. Get married and you and your spouse may pay less to Uncle Sam. Or you may pay more. It all depends.
Whether you get a marriage bonus鈥攜our combined tax bill goes down鈥攐r suffer a marriage penalty鈥攜ou pay more as a couple鈥攄epends on various factors. Who has how much income from what sources? Who incurs deductible expenses? Who can claim children as dependents? And what tax preferences might you qualify for? It鈥檚 not always obvious whether walking down the aisle will make you winners or losers at tax time.
The Tax Policy Center鈥檚 new shows whether a couple would pay more or less income tax if they are married and file jointly, compared with staying single and filing individual tax returns. Just enter information about income and deductible expenses (including which partner has each) and whether you have children (plus who鈥檇 claim them if you weren鈥檛 married) and the calculator shows how much income tax you鈥檇 pay if you were married and how much you鈥檇 pay if you weren鈥檛.
The calculator considers many but not all factors that affect a couple鈥檚 tax liability. For example, it includes only three tax credits (the EITC, the child credit, and the child and dependent care credit). Other credits, such as those related to education, can also lead to marriage penalties but aren鈥檛 in the calculator. And it includes only the most common itemized deductions.
Marriage bonuses and penalties have coexisted for decades. Congress created widespread bonuses in 1948 when it instituted joint filing. Before that, everyone had to file his or her own return and marriage didn鈥檛 matter (except in community property states, but that鈥檚 a whole other story).
Marriage penalties didn鈥檛 appear until the 1960s, when Congress adjusted tax brackets to mitigate what some viewed as a singles penalty鈥攁 marriage bonus viewed from a single person鈥檚 perspective. (See the that I wrote 15 years ago; it mostly still applies today.)
More recently, the 2001 tax cuts reduced marriage penalties鈥攁nd increased bonuses鈥攂y adjusting some tax brackets and the standard deduction and coordinating thresholds for phasing out certain tax preferences. That fixed most of the problem for middle-income taxpayers but high-income, dual-worker couples still face a penalty because higher tax brackets for joint filers are less than twice as wide as those for single filers.
Marriage bonuses and penalties aren鈥檛 random. One-earner couples almost always get bonuses. Spouses with similar incomes, particularly those in higher tax brackets, almost always suffer penalties. Having children can magnify both outcomes, particularly for low-income families. And same-sex couples, who cannot file joint federal tax returns regardless of their marital status, have no choice about how they file but may still benefit if joint filing would impose marriage penalties.
The calculator makes it easy to determine the tax consequences of marriage. But I have two observations for any reader tempted to use a potential marriage penalty as an excuse for not getting married. Taxes aren鈥檛 the least bit romantic and, more importantly, your mother won鈥檛 be happy.
