How to Avoid the Marriage Penalty Tax

A “marriage penalty” in the U.S. tax code occurs when a married couple’s combined tax liability is higher than it would be if they had remained single and filed individually. This situation often arises when two individuals with similar incomes marry. Conversely, a “marriage bonus” occurs when a couple’s combined tax payment is less than their individual tax bills would have been, which is more common when one spouse earns significantly more than the other.

The reason for this discrepancy lies in the progressive structure of the federal income tax system. While many tax bracket thresholds for joint filers are double the amounts for single filers, this is not universally true across all income levels. Combining two incomes can push the couple into a higher marginal tax bracket faster than if they were taxed separately.

Determining Your Marriage Tax Situation

Understanding whether you face a marriage penalty or a bonus requires a direct comparison of tax liabilities. The only way to know your specific situation is to calculate the tax both ways: once as two separate single individuals and once as a married couple filing a joint return.

The primary drivers of the marriage penalty are the income tax brackets and the standard deduction. While tax bracket thresholds for married couples filing jointly are often double those for single filers, this does not apply to the highest income tax bracket. For the 2025 tax year, the 37% rate applies to taxable income over $626,350 for single filers but begins at $751,600 for married couples filing jointly, an amount less than double.

For example, imagine two individuals each with a taxable income of $100,000. As single filers in 2025, their income would fall into the 22% tax bracket. When they marry and file jointly, their combined taxable income of $200,000 remains within the 22% bracket for married filers, avoiding a significant penalty.

A different outcome occurs if their incomes are higher. Suppose two individuals each earn $400,000. As single filers, they would each be in the 35% marginal tax bracket. When married, their combined income of $800,000 pushes a portion of their earnings into the highest 37% tax bracket, creating a clear marriage penalty.

To determine your own situation, first calculate the tax for each person as if they were single. This involves taking their gross income, subtracting any deductions to find adjusted gross income (AGI), and then subtracting the single standard deduction or itemized deductions. Next, calculate the tax liability as a married couple filing jointly by combining incomes and subtracting the larger joint deductions. Comparing the joint liability to the sum of the two single liabilities will show your penalty or bonus.

Filing Status Considerations

After marriage, you have two primary filing options: Married Filing Jointly (MFJ) or Married Filing Separately (MFS). While most couples find that filing jointly results in a lower tax bill, MFS can be a strategic move in a few distinct circumstances.

One reason to file separately is to maximize medical expense deductions. You can only deduct qualified medical expenses that exceed 7.5% of your adjusted gross income (AGI). If one spouse has substantial medical bills and a lower income, filing separately allows them to use their individual AGI, making the 7.5% threshold easier to surpass.

MFS may also be beneficial if a spouse is enrolled in an income-driven repayment (IDR) plan for federal student loans. These plans often calculate payments based on the borrower’s individual income, not the combined household income. The potential savings on loan payments could outweigh the increased tax liability from filing separately.

Filing separately can also provide financial separation if you are concerned about your spouse’s tax compliance. When you file a joint return, both spouses are liable for the entire tax bill. MFS insulates you from your spouse’s tax errors or debts.

Despite these benefits, the drawbacks of MFS are substantial. The tax rates are less favorable, and the standard deduction for MFS filers is half of the MFJ deduction ($15,000 versus $30,000 in 2025). If one spouse itemizes deductions, the other is also required to itemize. MFS filers are also ineligible for many tax credits and deductions:

• The Earned Income Tax Credit
• The American Opportunity Credit and the Lifetime Learning Credit
• The deduction for student loan interest
• The ability to deduct contributions to a traditional IRA is severely limited
• The capital loss deduction is limited to $1,500 per person, compared to $3,000 for a joint return

Income and Withholding Adjustments

Proactively managing your income and tax withholding is a strategy for mitigating the marriage penalty. After getting married, it is important to revisit your Form W-4, Employee’s Withholding Certificate, with your employers. Your previous withholding as a single individual will likely be inaccurate, which can lead to under-withholding and a surprise tax bill.

When both spouses work, their combined income can push them into a higher tax bracket. The Form W-4 is designed to account for this, and Step 2 specifically addresses households with multiple jobs. The most accurate method is to use the IRS’s Tax Withholding Estimator, an online tool that provides a precise recommendation.

The estimator allows you to input both incomes, as well as information about dependents, deductions, and credits. The tool will then recommend the exact amount of additional tax that should be withheld from each paycheck. This proactive adjustment helps ensure you are paying the correct amount of tax throughout the year.

Beyond withholding, couples can sometimes manage their tax liability by timing their income. This is most feasible for individuals with control over when they receive income, such as business owners or freelancers. If a bonus or large payment will push you into a higher tax bracket, you may be able to defer that income into the next calendar year.

Similarly, managing capital gains can impact your tax liability. If you plan to sell investments that will result in a significant gain, you might consider offsetting those gains by selling other investments at a loss, a practice known as tax-loss harvesting. Coordinating these sales between spouses can help manage the impact on your joint taxable income.

Maximizing Deductions and Credits

To lower your final tax bill, you should maximize all available deductions and credits. For most married couples, this means finding ways to surpass the standard deduction for joint filers, which is $30,000 for the 2025 tax year. A primary strategy for this is “bunching” itemized deductions.

Bunching involves consolidating multiple years’ worth of deductible expenses into a single tax year. This allows you to exceed the standard deduction in that one year, enabling you to itemize, while claiming the standard deduction in other years. Common expenses to bunch include charitable contributions, state and local taxes (up to the $10,000 limit), and medical expenses.

For example, instead of making a $10,000 charitable donation each year, a couple could donate $20,000 in one year. This concentrated donation, combined with other expenses, could push them over the standard deduction threshold. A Donor-Advised Fund (DAF) is a useful tool for this, allowing a large contribution for an immediate tax deduction while you recommend grants to charities over several years.

Coordinating contributions to tax-advantaged retirement accounts is another way to reduce your adjusted gross income (AGI). Both spouses should aim to maximize contributions to their workplace retirement plans, such as 401(k)s. For 2025, the contribution limit is $23,500 per person, with an additional $7,500 catch-up contribution for those age 50 and over.

Health Savings Accounts (HSAs) also reduce AGI. If you are covered by a high-deductible health plan, you can contribute pre-tax money to an HSA, where it grows and can be withdrawn tax-free for qualified medical expenses. For 2025, the maximum contribution for family coverage is $8,550, with an additional $1,000 catch-up for those age 55 or older.