Getting married is a major life milestone that changes many aspects of your lifestyle, including how you file your annual income taxes. In the United States, married couples typically file a joint tax return. Depending on your individual incomes, this shift in filing status can result in a tax reduction (marriage bonus) or a higher tax bill (marriage penalty).
The tax impact of marriage depends on the distribution of income between the spouses: - Marriage Bonus: Typically occurs when one spouse earns significantly more than the other. When they combine incomes on a joint return, the higher-earning spouse's income is pulled into lower tax brackets, reducing their combined tax liability. - Marriage Penalty: Occurs when both spouses earn similar, high incomes. When their incomes are combined, a larger portion is pushed into higher tax brackets compared to what they would pay filing as single individuals.
To see how your combined income fits into federal brackets, see our federal income tax calculator or estimate take-home pay with our salary paycheck calculator.
When you file a joint return, your standard deduction is exactly double the single deduction.
For example, if the single standard deduction is $13,850, the Married Filing Jointly standard deduction is $27,700. This provides a larger tax shelter for your combined income. To see how pre-tax retirement savings can further reduce your taxable income, check out our 401k savings planner or check our general retirement calculator.
Married couples can choose to file separately: - Married Filing Separately: Each spouse reports only their own income and deductions. This is rarely beneficial because it disqualifies you from key tax credits (such as the child tax credit or student loan interest deduction). - It is usually selected if one spouse has high medical expenses or to keep student loan payments low under income-driven repayment plans.
Suppose Spouse A earns $90,000 and Spouse B earns $10,000 gross annually: - Filing as single individuals, their combined federal tax liability would be higher because Spouse A is taxed at higher marginal rates. - Filing jointly, their combined income of $100,000 is taxed under married brackets, which have wider income ranges. - This couple receives a substantial marriage bonus, saving money on their combined tax bill.
Maximizing your tax savings is a key part of personal wealth planning. Reinvesting your marriage tax refund allows compound interest to build up your savings over time.
Reducing your tax liability increases your net income, allowing you to allocate more money to your savings and investment goals.