Tax Penalty - Married vs. Single

The marriage penalty refers to the fact that under United States' tax rates, certain couples pay more income tax when filing a personal income tax return as "married filing jointly" than they would filing as separate unmarried taxpayers.

Identification

The United States' income tax system assigns progressively higher income tax rates to taxpayers with greater levels of taxable income. These levels are known as tax brackets. Currently, the brackets are 10, 15, 25, 28, 33 and 35 percent. Beginning with higher earning taxpayers in the 25 percent bracket, the income tax rates paid by taxpayers "married filing jointly" are greater than those paid by two single individuals, earning equivalent amounts, who file separate tax returns.

History

Prior to 1969, married, dual-income taxpayers had an advantage over individual taxpayers by paying lower average tax rates. The marriage tax penalty resulted from the Tax Reform Act of 1969, where Congress attempted to eliminate this advantage. The Economic Growth and Tax Relief Reconciliation Act of 2001, the Jobs and Growth Tax Relief Reconciliation Act of 2003, and the Working Families Tax Relief Act of 2004 all contributed toward the elimination of the marriage tax for lower income taxpayers.

Future

The provisions eliminating the marriage penalty for lower income taxpayers are due to expire in 2011. Congressional action is needed for the extension of these provisions.

References

• Tax Policy Center, Urban Institute & Brookings Institution: Marriage Penalty
• National Center for Policy Analysis: Marriage Penalty Relief in the New Tax Law
• Internal Revenue Service: 1040 Instructions
• "Hastings Law Journal"; One Is the Loneliest Number: The Single Taxpayer in a Joint Return World; Kahng, Lily; February 2010