What Are the Tax Benefits of Being Married?

Marriage significantly alters a couple’s financial landscape, particularly concerning tax obligations. The U.S. tax system provides distinct treatments for married individuals compared to single filers, leading to various tax advantages that impact annual income tax liabilities, retirement, and estate planning.

Choosing Your Filing Status

Married individuals have two primary tax filing options: Married Filing Jointly (MFJ) or Married Filing Separately (MFS). The choice between these statuses significantly influences a couple’s overall tax liability and eligibility for various tax benefits.

Most married couples find it advantageous to file jointly, a status where both spouses report their combined income, deductions, and credits on a single tax return. This option often results in a lower overall tax liability because joint filers typically benefit from wider tax brackets and higher standard deductions compared to single filers. For instance, in 2024, the standard deduction for married couples filing jointly is $29,200, double that for single or married filing separately individuals.

Conversely, Married Filing Separately involves each spouse filing their own individual tax return, reporting only their own income, deductions, and credits. While less common, this status might be considered in specific situations, such as when one spouse has significant itemized deductions like high medical expenses that exceed 7.5% of their Adjusted Gross Income (AGI). Additionally, MFS can be chosen to maintain financial independence or avoid joint liability for a spouse’s tax issues or debts. If one spouse itemizes deductions under MFS, the other spouse must also itemize, even if their individual itemized deductions are less than the standard deduction amount. Choosing MFS often leads to a higher combined tax liability and can disqualify couples from certain tax credits and deductions that are typically available only to joint filers.

Key Income Tax Advantages

Married couples, especially those filing jointly, can realize several income tax advantages that may reduce their overall tax burden. These benefits stem from how the tax code treats combined incomes and provides specific credits and deductions. One common advantage is the “marriage bonus,” which occurs when a couple’s combined tax bill decreases after marriage, typically when two individuals with disparate incomes marry. This happens because a higher earner’s income can be taxed at lower rates when combined with a lower earner’s income within the wider tax brackets for joint filers.

Married couples filing jointly also often qualify for various tax credits designed to support families and specific expenses. The Child Tax Credit (CTC) is one such benefit, with married couples often qualifying for the full credit at higher income levels than single filers. Another is the Credit for Child and Dependent Care Expenses, which allows couples to claim a credit for a percentage of care expenses incurred to allow them to work or seek employment. For 2024, the maximum expenses are $3,000 for one qualifying dependent and $6,000 for two or more, with the credit percentage ranging from 20% to 35% based on income.

The Earned Income Tax Credit (EITC) offers refundable tax benefits for low- to moderate-income workers, and married couples filing jointly can qualify for higher income thresholds and larger maximum credit amounts. For example, in 2024, the maximum income to qualify for EITC for joint filers with three or more children is $66,819, allowing more couples to benefit or receive a larger credit. Education credits, such as the American Opportunity Tax Credit (AOTC) and the Lifetime Learning Credit (LLC), also have higher income phase-out thresholds for married couples filing jointly. For instance, the Lifetime Learning Credit begins to phase out for joint filers with a modified adjusted gross income between $160,000 and $180,000 in 2024, enabling more couples to claim these credits for qualified education expenses.

Retirement Account Benefits

Marriage can also provide distinct advantages when it comes to saving for retirement, particularly through tax-advantaged accounts. A significant benefit is the Spousal IRA, which allows a married individual with little or no earned income to contribute to an Individual Retirement Account (IRA) based on their spouse’s earned income. This provision enables both spouses to save for retirement, even if only one is actively working and earning taxable income.

For 2024, the annual contribution limit for an IRA is $7,000, with an additional $1,000 catch-up contribution for those aged 50 or older. Under the Spousal IRA rules, the total contributions for both spouses cannot exceed the couple’s combined taxable earned income. This flexibility ensures that a non-working or lower-earning spouse can still build their retirement nest egg, contributing up to the individual IRA limit, provided the working spouse has sufficient earned income. While specific income limitations apply for deducting traditional IRA contributions or contributing to Roth IRAs, married couples filing jointly often have higher income thresholds than single filers, allowing for greater tax-advantaged savings opportunities.

Estate and Gift Tax Benefits

Married couples benefit from unique and substantial advantages concerning estate and gift taxes, facilitating the transfer of wealth without incurring significant tax liabilities. A primary benefit of these is the unlimited marital deduction. This provision allows spouses to transfer an unrestricted amount of assets to each other, either during their lifetime or at death, without incurring federal gift or estate tax. This means that a spouse can leave their entire estate to their surviving spouse without any federal estate tax due at that time, serving as a powerful tool for wealth preservation and transfer within the marriage.

Another significant advantage is the portability of the Deceased Spousal Unused Exclusion (DSUE). This rule permits the unused portion of a deceased spouse’s federal estate tax exclusion amount to be transferred to the surviving spouse. This can effectively double the amount the surviving spouse can pass on free of federal estate tax, which is particularly beneficial for larger estates that might otherwise face substantial estate tax liabilities. To elect portability, the surviving spouse must typically file a federal estate tax return, even if no tax is due.

Additionally, married couples often hold assets in joint ownership, which can simplify the transfer of property upon the death of one spouse. Assets held jointly with rights of survivorship generally pass directly to the surviving spouse outside of probate. Furthermore, assets inherited by a surviving spouse often receive a “stepped-up basis.” This means the asset’s cost basis is adjusted to its fair market value at the time of the deceased spouse’s death, which can significantly reduce potential capital gains taxes if the surviving spouse later sells the asset.