Is there a marriage tax penalty? Yes there is such a thing and it is part of the taxation laws which applies to all married US citizens. When it comes to any aspect of taxation, all things boil down to and are decided by one number which is your income. The marriage tax penalty is dependent on the individual incomes of the couple filing jointly. In fact, marriage tax penalty is the difference between what taxes are payed by a couple married filing jointly and what amount of tax they would have paid if they filed as singles. If both earn almost the same income, then they are taxed more. However, if the difference between the income of both was high, they get tax relief.
Prior to 1969, married couples had a considerable advantage when it came to paying taxes if they filed jointly, compared to singles. The marriage tax penalty was introduced by law makers in the 1969 legislation which was aimed at making the tax system fair to married couples and singles alike. However, due to this legislation and the subsequent raise in taxation in 1993, many married couples who were earning almost similar incomes had to pay very high taxes as compared to couples who had only one high earning member. The tax cuts in 1997 didn't help them either. During 1996, almost 42% of married people in USA suffered from an average marriage tax penalty of almost $1400. Men and women had to think about taxation issues, while deciding whether to marry or not, other than the usual commitment issues!
However, relief came in a legislation passed in 2001 and later, which doubled the standard deduction for married couples filing jointly compared to that for singles. Also the higher limit for 15% tax bracket was increased significantly. Both these changes and other temporary amendments provided relief to a lot of married couples who were filing jointly and fell in the lower tax bracket. As of now, the marriage tax penalty is not applicable to married couples falling in the low tax brackets till the end of 2010. However, this penalty might return in 2011 if congress doesn't pass any legislation authorizing continuation of marriage tax penalty relief. The married couples falling in the higher taxation bracket are still subject to marriage tax penalty. A marriage tax penalty calculator, based on the existing taxation limits and income tax rates, can reveal the amount of additional tax you may have to pay for being married!
Prior to 1969, married couples had a considerable advantage when it came to paying taxes if they filed jointly, compared to singles. The marriage tax penalty was introduced by law makers in the 1969 legislation which was aimed at making the tax system fair to married couples and singles alike. However, due to this legislation and the subsequent raise in taxation in 1993, many married couples who were earning almost similar incomes had to pay very high taxes as compared to couples who had only one high earning member. The tax cuts in 1997 didn't help them either. During 1996, almost 42% of married people in USA suffered from an average marriage tax penalty of almost $1400. Men and women had to think about taxation issues, while deciding whether to marry or not, other than the usual commitment issues!
However, relief came in a legislation passed in 2001 and later, which doubled the standard deduction for married couples filing jointly compared to that for singles. Also the higher limit for 15% tax bracket was increased significantly. Both these changes and other temporary amendments provided relief to a lot of married couples who were filing jointly and fell in the lower tax bracket. As of now, the marriage tax penalty is not applicable to married couples falling in the low tax brackets till the end of 2010. However, this penalty might return in 2011 if congress doesn't pass any legislation authorizing continuation of marriage tax penalty relief. The married couples falling in the higher taxation bracket are still subject to marriage tax penalty. A marriage tax penalty calculator, based on the existing taxation limits and income tax rates, can reveal the amount of additional tax you may have to pay for being married!
I;m a bit confused based on what I've read there is no marriage penalty in the tax bracket structure, so getting married usually won't hurt and can help. 20/20 tax resolution
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