Category: Tax Planning

MFJ vs MFS, Tax Planning

Marriage Penalty

What Is a Marriage Penalty?

A marriage penalty is when a household’s overall tax bill is higher if the married couple file taxes jointly. 

A marriage penalty typically occurs when both spouses have similar incomes.  This is true for both high- and low-income couples.

Federal Marriage Penalty

Prior to the Tax Cuts and Jobs Act (TCJA) of 2017, the marriage penalty was for medium- to high-income earners. You will note that the income tax brackets for married couples at the top of the income tax schedule were not twice as wide as the equivalent brackets for single individuals.
 
 After the  the Tax Cuts and Jobs Act (TCJA) of 2017,   all tax brackets for married filers are exactly double those for single filers, except for the top 37 percent marginal rate, in which case the tax bracket for married filers is just 20 percent wider than for single filers.  Therefore, marriage penalties at the federal level are generally felt at high income levels.


2023 Federal Income Tax Brackets and Rates for Single Filers, Married Couples Filing Jointly, and Heads of Households
Tax RateFor Single FilersFor Married Individuals Filing Joint ReturnsFor Heads of Households
10%$0 to $11,000$0 to $22,000$0 to $15,700
12%$11,000 to $44,725$22,000 to $89,450$15,700 to $59,850
22%$44,725 to $95,375$89,450 to $190,750$59,850 to $95,350
24%$95,375 to $182,100$190,750 to $364,200$95,350 to $182,100
32%$182,100 to $231,250$364,200 to $462,500$182,100 to $231,250
35%$231,250 to $578,125$462,500 to $693,750$231,250 to $578,100
37%$578,125 or more$693,750 or more$578,100 or more

State Marriage Penalty


Fifteen states have a marriage penalty built into their bracket structure.

Seven additional states (Arkansas, Delaware, Iowa, Mississippi, Missouri, Montana, and West Virginia), as well as the District of Columbia, offset the marriage penalty in their bracket structure by allowing married taxpayers to file separately on the same return to avoid losing credits and exemptions available to joint filers or which cannot be allocated among filers (for instance, child tax credits). 

Ten states have a graduated-rate income tax but double their brackets to avoid a marriage penalty: Alabama, Arizona, Connecticut, Hawaii, Idaho, Kansas, Louisiana, Maine, Nebraska, and Oregon.