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Just in time for wedding season, the Tax Policy Center has released an updated version of our Marriage Bonus and Penalty Calculator. The calculator shows the difference in income taxes owed for couples before and after they tie the knot. TPC has updated the calculator to include the recently-enacted Tax Cuts and Jobs Act, so you can find out how you and your potential spouse will fare under the new tax law. It works for already-married couples just as well.
Most couples will pay lower income taxes after they are married than they would as two separate taxpayers (a marriage bonus), but some will pay a marriage penalty. Typically, couples with similar incomes will be hit with a penalty while those where one spouse earns significantly more than the other will almost always get a bonus for walking down the aisle.
Marriage penalties can happen for a variety of reasons, but sometimes can affect lower income tax payers through loss of income tax credits. For example, in 2018 a couple with one child where both partners make $25,000 would pay $3,117 less in taxes if they did not marry. This is because their combined income means the married couple would not qualify for the Earned Income Tax Credit. Thus, they’d pay a higher total amount of income tax on their joint income than if they did not marry.
Now consider a couple where one partner makes $125,000 a year and the other makes $50,000. Let’s assume that this couple has no itemized deductions, and therefore will take the standard deduction for 2018. They will pay $681 less for the current tax year if they marry than if they file individually.
If you are one of the couples lucky enough to receive a marriage bonus, print out the Detailed Breakdown of the changes in taxes and present it to your intended. Nothing quite says romantic marriage proposal like an itemized list of tax cuts that come with changing filing statuses.
There was a technical issue with the marriage bonus and penalty calculator around 12:00pm EST on 4/26/2018. It is now resolved. We apologize for any inconvenience.
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