In honor of the one day every year when even the most wonkish tax policy nerds can set aside the calculators and spreadsheets for a bottle of wine and some red roses, here’s some cold, hard, unemotional data about the financial consequences of government-recognized matrimony.
The upshot: If you earn about the same income as your would-be spouse, your bank account will be better off if you don’t get married.
According to a new analysis from the Tax Foundation, couples who earn roughly the same amount of money are most likely to face a tax penalty for getting hitched, and couples at both ends of the income spectrum are more likely to be penalized for tying the knot than middle-income earners.
For example, two people who each earn $15,000 and are jointly raising one child would end up paying more than $600 in extra federal taxes if they get married.
At the higher end of the scale, a couple that earns more than $250,000 jointly would have to pay an additional Medicaid surtax if they get married, but the same surtax only kicks in at $200,000 for individuals. Under the tax reform bill passed in December, tax rates for married couples are exactly double the tax rates for unmarried individuals a significant change from the old tax code—until you hit the top marginal bracket of 37 percent, which kicks in at $500,000 for singles but $600,000 for couples. That means most people won’t see any significant marriage penalty at lower income levels, but couples earning well into the six figures could end up paying thousands in additional taxes after their wedding.
Besides draining away any romantic inclinations you might have been feeling today, marriage bonuses and penalties have real consequences for public policy and the economy. “These penalties and bonuses potentially affect people’s behavior, especially whether to work,” says the Tax Foundation’s Amir El-Sibaie, who wrote the report.
Tax status isn’t a deal-breaker for most couples deciding whether to get married, but financial incentives do matter in the search for love. Aside from wishy-washy greeting card nonsense about “meeting the right person,” the most common reason never-married adults give for not being married is that they are “not financially stable,” according to the Pew Research Center. Not surprisingly, low-income individuals are much more likely to avoid marriage for financial reasons, Pew found.
Low-incomes couple can get whacked by a secondary marriage penalty because some government welfare programs are means-tested differently for individuals than for married pairs.
And if your marriage falls apart? Well, the tax bill may have made your divorce more expensive too, by eliminating a deduction for alimony payments. Madeline Marzano-Lesnevich, president of the American Academy of Matrimonial Lawyers, says that change “removed a powerful negotiating tool and turned it into a difficult stumbling block for spouses trying to settle a divorce.”
But that’s exactly the type of reform that Congress should have done more of when it rewrote the federal tax code late last year. Specialized deductions and exemptions—whether for having children, for paying alimony, or for putting solar panels on your roof—only distort incentives. The tax code should not be used for social engineering.
And the tax code should not treat married individuals differently from single people. Eliminating married couples’ ability to file taxes jointly would be one way to solve the problem, says El-Sibaie. But, like other possible solutions, that’s politically difficult.
Not everyone ends up paying more for the privilege of being married. Under current tax law, a couple earning $60,000 jointly would be on the hook for $8,560 in federal income and payroll taxes this year, according to the Tax Foundation’s analysis. Getting hitched wouldn’t reduce the payroll taxes, but it would allow this theoretical couple to pay $31 less in federal income taxes.
Of course, that’s less than the cost of a marriage license in most states.
If even after all that, you’re still determined to find a long-term romantic partner—well, the blockchain can help.