While marriage and household formation is generally considered a positive for the U.S. economy, it can sometimes be a negative for taxpaying spouses.
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Some couples face what is known as a marriage penalty, which means if they file jointly they incur higher tax rates than if they had filed separately.
Here’s how it works: Typically in the U.S. tax system, two individuals with similar, higher incomes tying the knot are penalized because they are pushed into a higher income bracket, while exemptions or phase-out ranges remain constant. Couples with disparate incomes, on the other hand, may be slightly better off.
Marriage penalties can be as high as 12 percent of a couple’s income.
While couples may be hit with the higher tax rates at the federal level, some state tax codes also favor single filers.
Here’s a look at the states with a marriage penalty built into their bracket structure, as compiled by the Tax Foundation:
These states, on the other hand, while having a built-in marriage penalty, also give couples the option to file separately on the same return in order to avoid the negative consequences.