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The Marriage Penalty

1 min readBy: Claire Hintz

Download Special Report No. 77

Special Report No. 77

Executive Summary
Many elements of the taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. code vary with marital status, including the amount of the standard deductionThe standard deduction reduces a taxpayer’s taxable income by a set amount determined by the government. It was nearly doubled for all classes of filers by the 2017 Tax Cuts and Jobs Act (TCJA) as an incentive for taxpayers not to itemize deductions when filing their federal income taxes. , the earned income tax creditA tax credit is a provision that reduces a taxpayer’s final tax bill, dollar-for-dollar. A tax credit differs from deductions and exemptions, which reduce taxable income, rather than the taxpayer’s tax bill directly. , and the tax rate schedule. All of these differences can cause a married couple to have different tax liability that two similarly situated single people.

A married couple filing jointly incurs a “marriage penaltyA marriage penalty is when a household’s overall tax bill increases due to a couple marrying and filing taxes jointly. A marriage penalty typically occurs when two individuals with similar incomes marry; this is true for both high- and low-income couples. ” if their tax bill is higher than the combined tax bills that they would have paid if each could have filed singly. Similarly, a married couple receives a “marriage bonusA marriage bonus is when a household’s overall tax bill decreases due to a couple marrying and filing taxes jointly. Marriage bonuses typically occur when two individuals with disparate incomes marry. Marriage penalties are also possible. ” when the sum of the individual tax liabilities had they filed singly is greater than their tax liability under a joint return.