A Valentine’s Day Gift: An Updated Marriage Bonus And Penalty Tax Calculator

Taxes

Does Valentine’s Day make you think about marriage? If you need one more reason to take that step, consider that Uncle Sam may already have a wedding gift for you—a marriage bonus in the form of lower taxes.

To see if this marriage bonus applies to you, check out the Tax Policy Center’s updated Marriage Bonus and Penalty Calculator. It compares federal income taxes owed by couples if they remain single partners or if they get married.

The current federal individual income tax is designed to give most couples a marriage bonus, or at least not financially penalize them for marrying. Except for those with the highest incomes, tax brackets for married couples filing a joint return are twice as wide as those for single returns. And the standard deduction for married couples is twice that for single filers.

This means that if two singles with significantly different earnings marry and then file jointly, more of the couple’s combined earnings will fall into a lower tax bracket (with a lower income tax rate) than if each filed a separate return as a single taxpayer. Two singles with similar earnings, however, typically pay the same federal income tax, whether they marry and file jointly or remained unmarried and file two income tax returns as single taxpayers.

Though less common, some high-income couples with combined income over $600,000 may pay a marriage penalty because the highest tax brackets are less than twice as wide for married couples as for single filers. This is most likely to happen where the spouses have similar earnings.

If a couple itemizes their deductions rather than taking the standard deduction, they may be better off filing two single returns rather than marrying and filing a joint return, depending upon how their combined income and deductions are distributed between them. This is particularly true if the individuals claim a deduction for state and local taxes (SALT) because the same $10,000 annual deduction limit applies to joint and single tax returns, effectively doubling the limit for the unmarried couple who file two single returns.

As always, children change everything—including the taxes you pay. An unmarried parent who lives with their children can file as a head-of-household. Tax brackets are wider for this filing status than for single filers, but not as wide as they are for joint returns of married couples. The standard deduction for head-of-household filers is larger than the standard deduction for singles, but smaller than for joint filers.

As a result, an unmarried couple with children is more likely to pay higher taxes if they marry and file jointly than if they stay single and one partner files as a head-of-household and the other files as a single taxpayer.

The earned income tax credit (EITC) further complicates the situation for lower-income working couples with children because—like other refundable tax credits—it phases out as income rises. If one partner qualifies for the EITC but the other earns enough to disqualify the couple from the credit, the qualifying partner could be better off staying single—at least when it comes to paying taxes. 

The Marriage Bonus and Penalty Calculator can help you sort through these complicated calculations. If you’d like to learn more about marriage bonuses and penalties and see some examples, you can also visit the Tax Policy Center Briefing Book entry: What are marriage penalties and bonuses?

But remember, marriage is about more than money. Really

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