Marriage Tax Bonuses and Penalties

A/N – this is a post about the United States – your situation may be very different if you live elsewhere, as most other major countries don’t do taxes the same way the us does.

When discussing the idea of marriage from an aromantic or asexual perspective, one of the common refrains you may hear is “maybe I’ll get married just for the tax benefits”. After all, one of the significant changes that marriage brings (as opposed to just living together, which has its own financial benefits) is that a couple will now be considered a single “household” under the law, and will be taxed accordingly – which in some cases can indeed bring potential savings when tax day comes around, which is referred to as the marriage bonus.

However, the issue is a little more complicated that that. While marriage can lower the tax burden for many married couples, for other couples getting married will actually increase the amount of taxes they owe, in what is known as the marriage penalty.

What determines whether a particular couple will receive a marriage benefit or a marriage penalty? You can read a little more about the mathy details and see a nifty chart here, but the short summary is that:

  • Couples where one partner has either no income or an relatively much lower income will almost always benefit from marriage
  • But couples where both partners have the similar incomes may instead face tax penalties from marriage (if their combined income can bump them up into a higher tax bracket than they would be in otherwise). Couples at the upper or lower ends of the income bracket will be the most strongly affected.

This is another part of the reason why some “millenials” avoid getting married – for many couples where both work (as is increasingly required as wages stagnate) it isn’t actually always financially beneficial to get married, at least from a tax perspective. (Though inheritance rights, child custody, insurance, joint property, social security and other benefits of marriage may still make the tax penalty worth it for some).

This “marriage penalty” is also a big deal for disabled, low-income, and other vulnerable couples  – some government benefits like disability are reduced for married couples as opposed to individuals filing separately, and filing as a married couple can push many low income people over thresholds for welfare support like the Earned Income Tax Credit that they would have been eligible for if they filed separately.  If you’re barely scraping by already, that small difference can be crucial, which means that many couples that may want to be married may not be financially able to.

(The reason for this is that the US tax policy is based on the idea that ‘two households with the same overall income should pay the some overall in taxes’, which can lead to uneven treatment of married and unmarried couples; on the other hand, other systems (like in many parts of europe) that rate taxes on an individual rather than household basis may emphasize that ‘unmarried couples should pay the same in taxes as equivalent married couples’, which can instead lead to uneven treatment of single income vs. dual income households. So it comes down to which form of equity you personally consider more important)

What does this mean for ace communities?

As a community with a high interest in being creative with relationship structures – whether that means things like pursuing committed romantic relationships outside the structure of traditional marriage, considering a “marriage of convenience” with a platonic pal for practical benefits, polyamory, or other nontraditional forms of relationships, knowing how things like marriage will actually affect your particular situation is important.

And while one common narrative gripe among single communities is that “married couples get all the tax benefits and that’s not fair”, that actually isn’t always the case – and it’s especially unlikely for people considering relationships that don’t fit into the heterosexual “one high income breadwinner and one no income homemaker” mold.(Who are also more likely to be queer, to be lower income, to be non-white, etc.)

That is, when we talk about things like “the tax benefits of married people”, we should acknowledge that those benefits are only accessible to one (often more privileged) segment of married couples – and that many other couples are actually penalized for marriage instead (and we should keep that in mind when we catch ourselves griping about the tax code being unfair to unmarried people).

That’s something to be aware of when we take a serious look at how we want to navigate the current legal system for relationships, as well as when we think about proposals for how we’d ideally like that legal landscape to look in the future. (Of course, this isn’t touching all the other legal aspects of marriage like child custody and visitation rights and inheritance and all that – those are all complicated matters that deserve their own posts).

Further reading:

NYT article on Marriage Bonuses and Penalties, with nifty graphs

Marriage Penalties and Bonuses explanations from the Tax Foundation

Marriage Penalties on Wikipedia

Deeper analysis of how Marriage Tax Penalties affect low-income couples

A really dense detailed look at US tax policies and marriage

A mathy comparison of the “neutrality” of different types of tax systems WRT marriage

A/N – this is an expanded and cleaned up version of a comment I originally posted here.




About Sennkestra

I'm an aro ace and a bit of an [a]sexuality nerd; an officer worker by day and an ace community organizer and activist by night. When I'm not reading stuff on the internet I like to cook fancy food, watch anime, and make arts and crafts projects.
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One Response to Marriage Tax Bonuses and Penalties

  1. Pingback: Linkspam: February 3rd, 2017 | The Asexual Agenda

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