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How Much the Marriage Tax Penalty Will Cost You

Your spouse's high income might be nice -- until it bumps you into a higher tax bracket.

Figurines look at a US tax return.
By Jim Wang

Marriage is a wonderful thing, right? It is ... unless you're talking taxes.

When talking about marriage and money, most experts talk about the tax advantages of getting married. However, these tax advantages are often only available to married partners with large disparities in income.

Sadly, spouses who earn similar amounts of money -- especially those who are considered high earners -- are often subject to a marriage tax penalty.

What Is the Marriage Tax Penalty?

When you marry, you have the option of filing your tax return jointly, or filing separate tax returns. The marriage penalty takes effect when the taxes you pay jointly exceed what you would have paid if each of you had remained single and filed as single filers.

The marriage penalty is the opposite of what many call the marriage bonus. In a marriage bonus situation, you pay less in taxes as a result of your married status. The marriage bonus is most likely seen in partnerships where one spouse earns significantly less than the other. Situations in which one spouse stays at home or has a part-time job rather than a full-time job are most likely to result in a marriage bonus.

If you take a look at the internal revenue service tax brackets, you'll notice that the brackets for married filing jointly isn't double that of single filers for every income range.

2014 Income Tax Brackets and Rates

Single Filers Married - Filing Jointly Married - Filing Separately
Rate Taxable Income Range Taxable Income Range Taxable Income Range
10% $0 to $9,075 $0 to $18,150 $0 to $9,075
15% $9,076 to $36,900 $18,151 to $73,800 $9,076 to $36,900
25% $36,901 to $89,350 $73,801 to $148,850 $36,901 to $74,425
28% $89,351 to $186,350 $148,851 to $226,850 $74,426 to $113,425
33% $186,351 to $405,100 $226,851 to $405,100 $113,426 to $202,550
35% $405,101 to $406,750 $405,101 to $457,600 $202,551 to $228,800
39.5% More than $406,750 More than $457,600 More than $228,800

For those with low incomes, the marriage penalty doesn't usually apply. For tax year 2014, the 15 percent tax bracket tops out at $36,900 in annual taxable income for single filers, while the upper limit is exactly twice that for married couples.

Things change in the 25 percent tax bracket though. For a single filer, this bracket ends at an income of $89,350. If you simply doubled that number to get the top amount for joint filers, you'd see $178,700. But, unfortunately, that's not how it works.

For 2014, the 25 percent tax bracket ends at $148,850 for married couples filing jointly. Thus, they find themselves penalized for their combined income.

If you make $50,000 in taxable income and your partner makes $15,000 working part time, you benefit from marriage. As a single person, your $50,000 income would put you in the 25 percent bracket while your partner paid in the 15 percent bracket. Marriage, though, brings you down to the 15 percent bracket, since your combined income of $65,000 is within ranges.

As your incomes climb, and as partners see more parity in their earnings, the marriage penalty becomes more pronounced. Take the top tax bracket: As a single person, your income has to be at least $406,750 to reach the 39.6 percent level. If you are married filing jointly, you end up in the highest tax bracket when your combined income reaches at least $457,600. That's a difference of $50,850.

If you and your partner each earn $300,000 a year, filing individually would put you each in the 33 percent bracket. File jointly, though, and now you're in the 39.5 percent bracket.

Other Penalties

Other penalties include phase outs for certain credits and deductions. Phase outs for personal exemptions and itemized deductions in 2014 begin at $250,000 adjusted gross income for singles and $300,000 for joint filers.

You can see how the marriage penalty can impact your ability to reduce taxable income.
Also, new taxes on investing and Medicare as a result of the Affordable Care Act impact married couples considered high earners, since the threshold is $200,000 for singles and $250,000 for joint filers.

So, if you and your partner both make $150,000, neither of you is subject to the new taxes as singles, but as joint filers you are subject to the new taxes (depending on how much of your income comes from wages versus investing).

The bottom line: As you prepare to tie the knot, it makes sense to consider the tax implications of your marriage. In some cases, you can benefit with the married filing separately status. Filing separately doesn't bring the brackets in line with single filers, though, and you have to figure out how to divide up your deductions.

Consult a tax professional to help you run the numbers to see whether or not filing separately would help you reduce your marriage tax penalty.

Jim Wang is an entrepreneur, who founded microblogger.com. For actionable advice on how to build your own business, join his free newsletter.

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My wife and I always filed separately. Neither one of us were concerned with the tax consequences. Filing separately however was a symptom of our marital malaise.
We're divorced now.

March 16 2014 at 2:13 PM Report abuse rate up rate down Reply

Didn't even mention the 9.5% rule and the Family Glitch in Obama care. The wife gets a 75% subsidy, IF SHE DIVORCES ME!

March 14 2014 at 4:47 AM Report abuse rate up rate down Reply

For all of you who don't claim income, nor file a tax return, thanks. It makes things much tougher on those of us who do claim our income. There's no free ride. Man up and pay your share, regardless who's in office. Quit sponging.

March 14 2014 at 12:03 AM Report abuse +2 rate up rate down Reply

I work under the table & until Nobama is out of office, I will continue to do so. When we elect a new president, I'll go back to work paying taxes & if the new president sucks, then I will go back to working under the table. I'm off the radar & I also don't have to pay for Obamacare.

March 13 2014 at 7:36 PM Report abuse rate up rate down Reply
Christopher Munchhof

Actually there is a significant marriage penalty for low income earners as well, especially if children are involved.

If each person in a couple earns $25,000 per year and they have a child, staying separate would allow for one person to claim the child and Head of Household status with a $8,950 standard deduction, while the other parent files single and gets the 6,100 standard deduction. If they were married they would only get a combined standard deduction of $12,200 instead of $15,505.

In addition the parent who claims the child will get the refundable earned income credit and additional child tax credit for about $3000 in refunds even if they didn't pay any federal taxes throughout the year. If they were married they would not qualify for the EIC because of their $50k income.

The tax benefits of marriage aren't really a year to year thing, but have more to do with the transfer of assets when a spouse dies or in the sale of a home. The benefits are more about certain events than they are ongoing annual savings.

March 13 2014 at 3:48 PM Report abuse rate up rate down Reply

This is no secret to the IRS. Congress made it that way. It is just that the tax code is no place for social statements. Filing status is neither necessary nor desirable. Only household size at most is necessary.
Flat tax only redistributes the bloated tax system. The flat percentage would be too high to be palatable without a standard deduction of at least $50,000.
Government and the irs are far too large not to mention incompetent. Ever try calling them on the phone or going to the district office?
Both need to be slashed.

March 13 2014 at 10:33 AM Report abuse +1 rate up rate down Reply
1 reply to moretrorun's comment

They can't afford to hire enough people to answer the phone! We have to cut their funding!

March 13 2014 at 1:40 PM Report abuse +1 rate up rate down Reply

The tax rates are they are now are criminal. There should be a flat tax...period.
The perrcentage of what you pay should never change nor should you be rewarded or punished for your income level..it is what it is. There shouldl be a threshold though for the flat tax rate to start....after that a constant percentage for all. If 90% of the deductions were eliminated we could do away with 90% of the IRS, 90% of the tax lawyers and simplify the system. The tax revenue woild steadly grow and the fixed tax rate could be changed as required to pay off the debt, balance the budget and put this country back on the track it was when it was a true super power. The current tax system is just a method of putting the IRS crooks head to head against the tax lawyers. It's simple, it's fair and it allows equal participation for all US workers.

March 13 2014 at 9:48 AM Report abuse +5 rate up rate down Reply
The Texas Cowboy

Leave it to the Federal Gov. to come up with more ways to get more money out of our pocket books, instead of the IRS making income tax easier they are creating more confusion on how we are to understand our taxes, its never enough with the Federal Gov. they bled money from every program in the Federal Gov. until these programs are now in trouble because of lack of funds to operate, they have taken so much money out of our Social Security Trust Fund that its nearly completely broke & Obama & Congress keep spending money (that we don't have), we have 20 million Americans that are looking for a job, 48% of the nation is on the "free dole" from the Gov. & I don't know who is going to be our next President but he is going to take on one "hell of a mess", for get what America used to be & look like because that America is gone for ever, I'm 75 years old & I can tell you the America that you see today is not the America that I grew up in, Obama said that we needed to spread our personal wealth but I don't see him or Congressmen spreading their personal wealth with any body but they sure know how to beat us out of our money, our country & our people are no longer admired by the rest of the world, we are laughed at by other nations, we as a people are no longer respected by other nations, personally I'll be glad when the 2016 elections are over with & we have a new person for our President, maybe we will get one that actually loves America & the American people, we can only hope for such a person...God Bless America & the American people....just my dimes worth.....

March 13 2014 at 8:42 AM Report abuse +2 rate up rate down Reply

The real "tax penalty" is unmarried FICA. Unmarrieds pay for survivor benefits and dependent benefits which they will never use. The so called marriage penalty, even if a mess, will never come close to being "unfair" when compared to the tax burden unmarrieds pay with FICA taxes.

March 13 2014 at 8:04 AM Report abuse -1 rate up rate down Reply