A marriage tax penalty is when a married couple incurs a higher tax rate when filing jointly than they would if they were filing separately. This penalty is due to the fact that state and federal tax brackets don’t always double the single-income rates for married couples filing jointly. The marriage penalty takes effect when the taxes paid jointly exceed what they would have paid if each of them had remained unmarried.
The marriage penalty is disproportionately affected by those in the highest tax bracket, as the income tax brackets for married couples at the top of the income tax schedule are not twice as wide as the equivalent brackets for single individuals. Currently, all tax brackets have a marriage penalty in their individual income taxes, with Washington having an unconventional threshold structure.
The 2017 changes to U.S. tax law significantly reduced the marriage penalty for many taxpayers, but it remains in place for the highest tax brackets. If you plan to claim deductible expenses, the marriage penalty could still impact you. If you are concerned about the tax implications of the marriage penalty, a local tax lawyer can help.
A marriage penalty occurs when a couple incurs a higher tax rate when filing jointly than they would if they were filing separately. This penalty occurs when tax-bracket thresholds, deductions, and credits are not double the amount allowed for single filers. For Couple 1, the penalty is $2,109 (5.3% of AGI) if the higher-earning partner is the HOH and $2,131 (5.3%) if it is the lower-income partner.
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Having an accounting degree, I am always for more people learning more about how taxes work. I think your article was very valuable. My one critique is a lot of your analysis is based on a couple who are both somewhat equal earners i.e these situations would not be apply or at least be a lot less extreme if incomes were disproportionate. While equal earners is common now, unfortunately, our tax laws were established when single earner families ruled. It is a good argument for proposing to the government to ensure married benefits are beneficial for all types of families.
I really appreciate the articles you guys put out, lots of insight full things and well made. Keep up the great work, I love your content! The audience for this article seems confusing. It seems like your trying to cast a wide net and talk to as many people as possible, but a lot of this content is only relevant to those in that higher tax bracket. I think you could cast a wider net and get a better audience if you explained the differences at the lower tax brackets as well. Instead of calling it it the marriage tax penalty, perhaps calling it something like “Marriage Taxes… Worst or Better than single?” And contrast the brackets and explain your own situation and what you guys are choosing to do. This would make the article relevant for more people, which would get the article more traction.
When I was married and had taxes taken out as married I had approximately $700 taken out a month. When I divorced and became single it doubled to around $1500 coming out a month. At the time I made about $100K. It definitely helped me to be married. The first year I didn’t realize the difference and I owed $8500 for taxes because I didn’t realize there was such a difference between filing single vs married and the amount coming out of my check was so different. Being single kills me in taxes. I have no kids to help ease that.
While I found this very beneficial and interesting, you neglected to talk about all the tax breaks married couples receive that are not available to single or HOH filing status. If you are married and have kids, there are even more tax breaks available, and only a small number of those are available to an HOH. When I got married, my husband and mine combine income did knock us into a higher tax bracket, but with the tax breaks for married and family, our tax burden was the lowest it’s ever been and our refund higher then we expected. I think it is important to talk about the pros as much as the cons.
Who would pay for their marriage? The burden is going on common people anyway. An increase in a member in that family means more cost to the economy. The old lady was caught evading taxes why she dint get penalised yet. Evading taxes for normal people is a strict punishment why the law is not the same for her.