It’s been awhile since we’ve written about the effect of marital status on taxes.
Last year, in our June 1 post, we discussed the tax implications of alimony. In today’s post, let’s touch on the topic of the so-called “marriage penalty.” Is it really true that getting married can cost you on your tax return?
The answer is not an unqualified yes or no. As The New York Times pointed out this week, the answer depends on income.
For some spouses, filing jointly will result in less tax than their two individual returns as single filers would have. For others, filing jointly will result in more tax (a phenomenon that is widely called the marriage penalty).
When marriage partners make a similar amount of money, the result is often the marriage penalty. But if the spouses have widely divergent incomes, the result is more likely to be paying less in taxes, due to the joint filing status. This could be called a marriage bonus.
Generally, tax rates go up along with income. But tax brackets for single and married filers are not in alignment; they are different.
Of course, the presence of children or absence of children can also affect the tax equation. For example, couples without children with combined income of between $40,000 and $175,000 often benefit from a marriage bonus.
In short, the existence of a “marriage penalty” is no urban myth. It is a well-documented fact. But there is also such a thing as a marriage bonus.