What Are the Tax Benefits of Marriage?

Marriage significantly alters an individual’s financial landscape, particularly concerning tax obligations. It introduces unique considerations that can lead to financial and tax benefits. This article explores how marital status can positively influence tax situations, focusing on available advantages.

Choosing a Filing Status

Married couples have two main tax filing statuses: Married Filing Jointly (MFJ) and Married Filing Separately (MFS). The choice significantly impacts a couple’s overall tax liability. To qualify, individuals must be married by December 31st of the tax year. If a spouse passed away during the tax year and the surviving spouse has not remarried, they are still considered married for that year and can choose to file jointly.

Married Filing Jointly combines both spouses’ incomes, deductions, and credits onto a single tax return. This status is generally the most advantageous, often leading to a lower tax bill or a larger refund compared to filing separately. Both spouses are equally responsible for the accuracy of the return and any tax, penalties, or interest owed.

Married Filing Separately means each spouse files their own tax return, reporting their own income, deductions, and credits. While this status ensures each person is solely responsible for their own tax liability, it can result in fewer available tax benefits and a higher overall tax burden for the couple. For instance, if one spouse itemizes deductions, the other spouse must also itemize and cannot claim the standard deduction.

Advantages for Income and Deductions

Filing jointly can lead to tax advantages, especially when there is a significant income difference between spouses, often called a “marriage bonus.” This happens because the couple’s combined income may fall into lower tax brackets than if each spouse filed individually. This allows more of the higher earner’s income to be taxed at lower marginal rates.

Married couples filing jointly receive a higher standard deduction compared to single filers. For 2024, the standard deduction for joint filers is $29,200, double that for single filers or those married filing separately ($14,600). For 2025, it increases to $31,500. This larger deduction directly reduces taxable income, potentially lowering their tax liability.

Beyond the standard deduction, married couples can more easily meet adjusted gross income (AGI) thresholds for certain itemized deductions, such as medical expenses. Medical expense deductions are allowed for amounts exceeding a certain percentage of AGI. With a combined AGI, a couple can more easily surpass this threshold, allowing them to deduct eligible medical costs.

Marriage can enhance eligibility for various tax credits. Couples filing jointly are more likely to qualify for credits like the Earned Income Tax Credit (EITC), Child Tax Credit, and education credits (e.g., American Opportunity Tax Credit or Lifetime Learning Credit). The EITC, designed for low-to-moderate-income taxpayers, can provide a significant refundable credit, and marriage can increase its benefit, especially if one spouse has low or no income. Child Tax Credit and education credits have income thresholds more favorable for joint filers, allowing more couples to qualify or receive a larger credit.

Estate, Gift, and Investment Planning

Marriage offers tax advantages in estate and gift planning through the unlimited marital deduction. This federal provision allows spouses to transfer an unrestricted amount of assets to each other, during their lifetimes or at death, free from federal estate or gift taxes. This means a surviving spouse can inherit the entire estate of their deceased partner without immediate tax consequences. The unlimited marital deduction can be a valuable tool for preserving wealth and deferring estate taxes until the death of the surviving spouse.

Another benefit for surviving spouses is the “step-up in basis” rule for inherited assets. When an asset (e.g., real estate or stocks) is inherited, its cost basis for tax purposes resets to its fair market value on the date of the deceased owner’s death. This adjustment can significantly reduce or even eliminate capital gains taxes if the surviving spouse later sells the asset, as taxes are only owed on appreciation occurring after the inheritance. In community property states, both halves of jointly owned property receive a full step-up in basis, providing an even greater tax advantage.

Married couples filing jointly benefit from higher income thresholds for favorable long-term capital gains tax rates. For instance, the 0% long-term capital gains tax rate applies to a higher income bracket for joint filers compared to single filers. This allows married couples to realize more capital gains without incurring a tax liability at higher rates. The 15% long-term capital gains rate also extends to higher income levels for joint filers.

Married couples can utilize a “spousal IRA” to save for retirement. This allows a working spouse to contribute to an IRA on behalf of a non-working or low-earning spouse, even if the non-working spouse has no earned income. For 2024 and 2025, each spouse can contribute up to $7,000 to an IRA, effectively doubling the family’s potential tax-deductible retirement savings. This helps ensure both spouses can build tax-advantaged retirement savings, regardless of individual employment status.

Other Financial Implications

Marriage can positively impact Social Security benefits, particularly spousal and survivor benefits. A married individual may be eligible to receive Social Security benefits based on their spouse’s earnings record, even with little or no work history themselves. This spousal benefit can be up to 50% of the working spouse’s full retirement benefit amount. To qualify, the spouse must be at least 62 years old, or caring for a child under age 16.

Upon the death of a spouse, the surviving spouse may be entitled to survivor benefits, which can be up to 100% of the deceased spouse’s benefit amount if the survivor has reached their full retirement age. This provides a financial safety net for widows and widowers. Eligibility for these benefits requires a marriage of at least one year for spousal benefits and potentially longer for survivor benefits.

HSAs offer another financial advantage. Married couples can utilize the higher family coverage contribution limits for HSAs, even if only one spouse is enrolled in an HSA-eligible high-deductible health plan. For 2024, the family contribution limit for an HSA is $8,300. This allows couples to save more for healthcare expenses on a tax-advantaged basis, as contributions are tax-deductible, earnings grow tax-free, and qualified withdrawals are also tax-free. This can lead to significant savings on healthcare costs over time.