The Tax Law Contains a Marriage Penalty

Learn about the two marriage penalties contained in the tax law.

By , J.D.

For tax purposes, the "marriage penalty" means that two people with the same income would pay more tax if they get married and file a joint return than if they stay single and file separately as single taxpayers. The tax law has long contained a marriage penalty. The tax reform law that went into effect in 2018, the Tax Cuts and Jobs Act (TCJA), reduced the marriage penalty somewhat, but it still exists, especially for higher-income taxpayers.

By the way, married couples can't avoid these penalties by filing their taxes separately—when they do this, their deductions are reduced or disallowed.

The Tax Rate Marriage Penalty

To avoid a marriage penalty, the tax bracket income thresholds for married couples must be exactly double those for single taxpayers. The TCJA created seven tax brackets, as shown in the following chart.

2022 Personal Income Tax Rates

Rate

Married Filing Jointly

Single

10%

$0 - $20,550

$0 - $10,275

12%

$20,551- $83,550

$10,276 - $41,775

22%

$83,551 - $178,150

$41,776 - $89,075

24%

$178,151 - $340,100

$89,076 - $170,050

32%

$340,101 - $431,900

$170,051 - $215,950

35%

$431,901 - $647,850

$215,951 - $539,900

37%

over $647,850

over $539,900

You can see that the income thresholds for marrieds are double those for singles, except for the last, top 37% bracket. Here, the income threshold for marrieds is $647,850, while the threshold for singles is $539,900 (instead of $323,925, which is one-half the married taxpayer amount). As a result, singles get an extra $215,975 at the lower 35% rate, while married couples filing jointly must pay tax at a 2% higher rate (37%) for every dollar they make over $647,850 in taxable income. This increases income taxes for married couples by up to 2.59%. Of course, these are wealthy married couples.

The marriage penalty was imposed at the top tax rate to help raise more revenue and enable Congress to fund other tax reductions in the TCJA.

State and Local Tax Marriage Penalty

Another marriage penalty in the TCJA relates to the personal itemized deduction for state and local taxes—that is, property taxes and either state income or sales taxes. The TCJA limits this deduction to a total of $10,000 per taxpayer per year. However, the $10,000 limit applies to both singles and married couples filing jointly. So, a married couple can deduct only $10,000 in such taxes, but an unmarried couple filing separate returns could each deduct $10,000 for a total deduction of $20,000. This results in a maximum marriage penalty of $3,700 for taxpayers in the top 37% bracket. The amount of the penalty is lower for married taxpayers in lower brackets.

Mortgage Interest Marriage Penalty

If you purchased your home after December 15, 2017, you may deduct the interest on $750,000 of home acquisition debt. The limit is the same whether a taxpayer is single or married. For example, if a married couple purchases a $1.5 million home, they may only deduct the interest on $750,000 of their mortgage debt. If an unmarried couple buys a home for $1.5 million, each may deduct the interest on $750,000 of their total mortgage debt.

Medicare Tax Mortgage Penalty

A 0.9% Medicare surtax applies to employee wages and self-employment income over $200,000 for single taxpayers, but only $250,000 for married taxpayers. So, if a married couple each earns $200,000 for a total of $400,000, they must pay a $13,500 surtax ($150,000 x .09 = $13,500). If they were single, they would pay nothing.

The Bottom Line

Most people don't earn enough money to worry about these marriage penalties. Indeed, lower-income taxpayers often receive a marriage bonus—that is, they pay less than singles with the same income. You can use a marriage penalty calculator to see how being married affects your taxes. If you'd pay more, you could wait until next year to get married (you're married for tax purposes if you get married any time during the year).

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