While “for the tax break” isn’t the most romantic reason to get married, it should nevertheless be near the top of the list—for some couples, anyway.
Depending on your situation, the tax break (or so-called “marriage bonus”) is a perk of wedded bliss. But what exactly is that marriage bonus—or its evil cousin, the marriage penalty? Would getting married be a boon or a bust for you come tax time?
Marry up, taxes down
The IRS has five different tax filing statuses: single, head of household, married filing jointly, married filing separately, and qualified widow(er) with a dependent child. The good news is that if you fall into more than one category, you can choose the filing status that lets you pay the lowest taxes.
Many couples find that filing jointly results in lower taxes than if they had remained single; this is the aptly named marriage bonus. The Tax Foundation, an independent, nonprofit tax research organization, has done the math here. According to the foundation, couples who have a significant disparity in income are most likely to reap the marriage bonus. This is because more of their combined falls into a lower bracket when they file jointly.
The opposite is true for couples who earn similar amounts, regardless of whether they are high or low earners. Filing jointly often increases their tax bill compared to what they would have paid had they stayed single: this is the marriage penalty.
For two high earners filing jointly, the penalty derives in part from a narrowing of the tax brackets at higher income levels and partly from the possible imposition of the Medicare Surtax. For low income filers, the penalty results primarily from a reduction of the Earned Income Tax Credit.
Do your research
So, will getting married lower your taxes? You’ll have to do the math, since the answer is unique to each couple. And if you do tie the knot, you’ll have to decide whether your status should be married filing jointly or married filing separately—but that’s a topic for another brief.
Meanwhile, learn more about taxes as they pertain to marriage—and everything else—in the Avvo tax law resource center.