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What Is The Marriage Tax “Penalty”?

If you ask most people whether it makes more sense (tax-wise) to be married or single, most would say that married couples get a tax break. However, most of these same people would be shocked to find out that that is conditional; in fact, married couples with two incomes face what some would call a “penalty” that needs to be fixed. This has become an even more widespread phenomenon now that same-sex couples can get married.

This is how it works: although the federal income tax brackets for married people are larger than single people (to accommodate two incomes), they are not double. This means that two-income households are pushed into larger tax brackets more quickly than they would have with the same salaries, filing individually/single. At the same time, married couples with only one income between the two of them benefit because their one income also gets the larger bracket (which is actually intended for two incomes). This makes being married a tax penalty – or benefit, depending upon whether you have one or two incomes and how large those incomes are. So, for example, while you may have had a taxation rate of 25 percent while you were single, you may end up with a 28 percent rate after you get married, even though you maintained the same salary.

Current Tax Options

Currently there are four tax brackets available, including:

  • Single filers;
  • Married people filing jointly;
  • Married people filing separately; and
  • Heads of household.

A couple who changes their status from single to married filing jointly might be subject to an increase in federal income taxes, especially if both spouses have high incomes. This is such an issue that couples are even warned about considering the income tax ramifications of marriage “before walking down the aisle.”

Furthermore, each state enacted statutes to regulate tax compliance, leaving taxpayers with often complex and confusing tax regimes, especially if you reside in one jurisdiction but work in another. And in addition, Florida has its own take on certain taxes; for example, it has no personal income tax and no state death/inheritance tax.

What Is The Solution?

One solution would be to stop taxing people based on marital status or simply double the tax bracket for married people. Another option would be to create a fifth tax filing status for two-income married couples whereby their tax brackets would be double those of single filers. This would effectively allow people to file as an economic unit without penalizing them for also having a secondary income-earner.

Florida Family Law & Marriage Attorney

Sandra Bonfiglio is available to help couples with any aspect of family planning issues, including associated tax implications. Contact our office online or call 954-828-9933 so that we can assist you. Our office is located in Fort Lauderdale, FL, and serves clients in and around Hollywood, Pompano Beach, Deerfield Beach, Dania, Pembroke Pines, Boca Raton, North Miami Beach, Opa Locka, Delray Beach, Miami, Hialeah, Broward County and Miami-Dade County.

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