If two individuals were considering marriage after college, what would the actual tax benefits be? Both are male. Both have full time jobs. In the United States.
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2 Answers
This depends greatly on both your total income and especially your income relative to each other. If you have very different incomes, then you'll get a bonus. Generally speaking, if you have substantially similar incomes, you will essentially pay a penalty regardless of your total income. The effect is actually pretty complicated because of the factors involved. There's a decent summary that's current here:
http://taxfoundation.org/article/understanding-marriage-penalty-and-marriage-bonus
The details can change with the tax code, so the answer to this question changes over time.
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The charts on the linked page are fascinating! Shows how messed up the tax code is.– minouCommented Dec 10, 2015 at 14:46
Brick was on the right path, but it's also about the level of income. If two $45K earners marry, there's no tax benefit or penalty. As incomes rise, you can see, a marriage penalty kicks in. Two high earners can do the math to see what the joy of marriage costs, in dollars and cents. (The numbers below reflect 2016 tax rates)
answered Dec 10, 2015 at 2:12
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When it says "amount over", does that mean the difference? For instance, if I make 38,650 a year, would taxes be 5,183.75 + (0.25 * 1,000) or 5,183.75 + (0.25 * 38,650)? Commented Dec 10, 2015 at 3:30
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This seems consistent with my answer and provides some of the tax tables. If children enter into the question, then there's a penalty even at much lower incomes, although that does not seem to be the OP's current situation.– user32479Commented Dec 10, 2015 at 5:46
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2@WyattLardie: It's the former. The latter would lead to discontinuous jumps in tax, which are not desirable. Commented Dec 10, 2015 at 6:44