Thoughts on the Marriage Tax Penalty, Now that I’m Married

Unlike many unsuspecting newlyweds, I was well aware of the marriage tax penalty long before I got married. It seemed like a cruel joke that the tax brackets were different for married couples than singles, and that once married you no longer could file as a “single person.” There’s plenty of publicity around the “marriage bonus” but this only applies if you have one working person in the household. If both partners work and make about the same amount of money, you end up screwed.

I got married anyway.

The marriage penalty impacts different classes in different ways. The worst impact is on lower income couples who end up phasing out of tax credits and other benefits such as healthcare allowances if both partners work, even if together the couple is still together earning at poverty levels. For middle income couples in high-cost-of-living areas, the $1k-$10k+ that has to be paid to the government just for the privilege of being married is significant. Is love worth that much?

I don’t mind paying taxes philosophically, I just believe it’s completely unfair and outdated to encourage one partner in a married couple not to work based on tax law. I abhor 99.999999% of Trump’s campaign pledges, but the one I could support was getting rid of the marriage tax penalty. As Trump seems incapable of getting anything passed (which is a good thing) I doubt the marriage tax penalty is going away any time soon.

However, I doubt anyone would say they think married couples should be penalized for being married. Even articles written about the subject matter in respectable financial publications fail to note that married couples no longer can file as single. Every person I share this information with who hasn’t experienced the marriage penalty themselves says “well, can’t you just file separately?” My answer – the answer – married, filing separately, is completely different from filing single. The tax brackets are different. You’ll pay even more in taxes filing separately, not to mention a number of other complications and expenses that arise in going this route. Once married, you are ineligible for singles tax brackets.

The impact of this is even more noticeable if you have children, because you’re completely phased out of child credits. The federal numbers look at income equally across the country, but we all know $150k in San Francisco is a heck of a lot different from $150k in Kansas. The model doesn’t make sense and seems like it should be illegal, but it isn’t.

The argument for the penalty is that as a married couple you spend less than you would if you were single. But this argument doesn’t hold up. Yes, it’s cheaper to live with a roommate, but you don’t need to be married to do this. It may be a little more cost effective to share health insurance if one partner is working at a job which doesn’t provide this benefit, but the savings is minimal and doesn’t make up for the tax penalty. The only justification for this is that long term, in ripe old age when a couple is getting social security, there are some benefits to marriage. But that, of course, requires living long enough to get to the age where you can take social security, and no one says you can’t get married at 65 to take advantage of these benefits without paying $10k per year for 35 years ($350k) in penalty.

I joke with my husband about getting divorced to save the money, but we won’t because we like being married for no good reason.

How much does the marriage tax penalty cost you each year, or do you receive a bonus?

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4 comments

  1. David says:

    I thought married couples making similar money got burned by the marriage tax penalty. But if one partner is making a lot more it is better to be married. I thought you made good money but your DH didn’t have similar income. Curious where the marriage tax penalty comes into play in you folks’ situation.

    1. Joy ( User Karma: 0 ) says:

      Yup, I thought that too. But it’s not accurate. I made about $195k and Mr. HECC made ~$100k in self-employment income. Being married definitely did not help. I’ll write another post that explains this more clearly.

  2. SP says:

    This article has some interesting calculators./ data: https://www.nytimes.com/interactive/2015/04/16/upshot/marriage-penalty-couples-income.html

    For childless married couples making between 29k and ~171k AGI with a 50-50 income split, there ins’t a penalty or bonus. For different income splits, you are likely to get a bonus. If you make more than 171k, you’ll pay a penalty for a 50-50 split and for most other splits too.

    The picture gets worse when you have children, where you are almost certain to pay a penalty ($1-$3k for the same 29-171k range, but more if you make more).

  3. Leigh says:

    I completely agree with you. I do understand that it’s hard to fix this though! We paid an extra $6000 in 2016 for the privilege of being married. I think most people don’t calculate it though…

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