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August 20, 2015

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How does marriage impact your taxes?

Many Americans have heard of the so-called “marriage penalty.” This refers to the notion that marriage results in higher taxes for at least some married couples when filing jointly than the members of those couples would have had collectively as individuals.

Is this notion a myth or is it actually supported by empirical data?

The answer is a nuanced one, dependent in great part upon a couple’s income. According to a recent analysis by two tax policy specialists, some couples who file joint returns do pay more in taxes than they would have as individuals filing separately. But other couples who file jointly pay less than they would have as individuals, resulting in a marriage bonus.

The marriage penalty tends to hit couples at the high and low ends of the nation’s income distribution. It also affects couples in which the two spouses have comparable incomes. And, generally speaking, it affects many couples with children.

The marriage bonus often applies to couples without children who are, broadly speaking, middle class. Middle class, in this context, means couples with more than $40,000 and less than $175,000 in income. If you and your spouse are in that income range and don’t have kids, the two of you could find yourselves with less tax liability when filing jointly than you would have if you had filed separate returns.

In short, the marriage penalty is by no means a myth. But the connection between marriage and taxes is a complicated one, with questions of income level, child tax credits and other factors to be considered.

Tax Controversy