Marriage Penalty, Bonuses, and Smart Strategies

By the power vested in me by this state, I now pronounce you married. You may now kiss—and file your taxes jointly.

It may not have the air of romance, but after the wedding is planned and the honeymoon is booked, newlyweds have an important question in front of them as they start their lives together: whether they will file their taxes jointly or separately. 

This decision carries a lot of weight, as both have tax implications and may result in a potentially larger tax bill—via the so-called marriage penalty—or perhaps a larger refund. Couples should carefully consider their assets and choose the route that benefits the household, as they can now be classified as a single economic unit.

Why the Joint Filing Option Exists

Curious about the origins of joint tax returns? According to Jay Soled, director of the Master of Accountancy in Taxation program and department chair at Rutgers University, joint returns weren’t introduced in 1948 to benefit newlyweds but to benefit the government.

“In one way, the joint tax return was a way historically to eradicate what’s called assignment of income between spouses, ” he said. “Consider the fact that when you have two taxpayers who share a common agenda (i.e., tax minimization via the gaming of the progressive rate structure of the income tax), the only party likely to be shortchanged is the U.S. government.” 

He added, “The joint tax return is a byproduct of trying to eliminate income splitting between spouses and thereby facilitate tax administration, which is good for the country, dissuading taxpayers from circumventing their tax obligations.”

Of course, the tax code has changed a lot since then, and newly married couples should note the rules that could impact their tax bill.

Tax Changes After Marriage To Be Aware Of

Name and Address Changes

For individuals who opt to change their last names after marriage (a majority of whom are women in opposite-sex marriages, according to Pew Research Center), it’s advised to take that next step and report the name change to the Social Security Administration. The Internal Revenue Service (IRS) doesn’t require it, but when filing taxes, all of the names on a return have to match their Social Security numbers, lest your refund could be delayed.

For newlyweds who have changed their name, the Social Security Administration will ask for your marriage document as proof of your legal name change. The agency said that most card and record requests, which include name changes, can be made online.

Changing Your Form W-4

The other important party to notify of your marital status change (as well as a name change) is your employer, because it’s likely that the amount of money withheld from your paycheck needs to be updated, which you can do via a new Form W-4, Employee’s Withholding Certificate.

“The W-4 will walk you through a series of steps to calculate what is the correct amount of deductions to take in order to have the proper amount of tax withheld,” said Rob Burnette, CEO and fiduciary financial advisor at Outlook Financial Center in Troy, Ohio. “The W-4 used to be a very simple form. It is not any longer. So take your time with it.” Burnette added that withholding issues will get more complex with the passage of this year’s One Big Beautiful Bill Act, which impacts the taxation of tips and overtime work.

If you have one, consider consulting with your tax preparer on how much you and your spouse should withhold.

Choosing Your Filing Status

As mentioned earlier, getting married means that two formerly independent taxpayers can now file taxes as a single economic unit (filing as single is no longer an option for married individuals). At Jackson Hewitt, chief tax officer Mark Steber noted that those who file jointly get a lot of benefits: the largest standard deduction, a higher maximum income amount for the phaseout of many tax benefits, and the lowest overall taxes on their income. This is not universal, however, as certain couples may find it advantageous to file their taxes as married filing separately. 

The primary factor to determine filing status is income. In certain rare cases, if the combined income of both spouses pushes them into the next tax bracket, they may owe the government a potentially hefty sum of money. That’s why potential savings could be had by filing separately. Even if one spouse owes taxes, the other’s refund could offset the bill, producing a net gain for the household.

Put another way: “The question that every newly married couple should be thinking about is, what is the benefit to the household now?” Burnette said.

The Marriage Penalty 

As mentioned, a married couple filing their taxes jointly usually nets them tax savings. But there are cases where the opposite is true: a married couple ends up with a bigger tax bill than if both individuals filed separately. 

Soled gives an example of a plastic surgeon who’s earning $1 million and their spouse, a nurse earning $100,000. In this case, the nurse is paying the highest marginal tax rate of 37%, as opposed to the 24% she would have paid if she filed separately.

The income disparity between spouses doesn’t need to be this high for the marriage penalty to be present. Even at more modest income levels, combining earnings can nudge couples into a higher bracket than one spouse would have faced alone. 

While couples should consider their options carefully with their federal returns, if they live in one of 15 states, there’s no way to avoid the marriage penalty with state taxes. These states are: California, Georgia, Maryland, Minnesota, New Jersey, New Mexico, New York, North Dakota, Ohio, Oklahoma, Rhode Island, South Carolina, Vermont, Virginia, and Wisconsin.

If you live in Arkansas, Delaware, Iowa, Mississippi, Missouri, Montana, or West Virginia, you have the option to file separately on your state return to avoid the marriage penalty. 

Tax Benefits of Filing Taxes as a Couple

Wider Tax Brackets and Lower Tax Rates

When a couple gets married, several benefits are conferred upon them as a newly created single economic unit. The most important may be that tax brackets are now double those of single filers. For example, the 2025 income range for a 22% tax rate is between $48,476 and $103,350 for single filers, while it’s $96,951 to $206,700 for joint filers. 

This is particularly helpful for couples with uneven incomes or couples in which only one person works, as they may fall into a lower bracket and pay a lower effective tax rate. Deductions and tax credits are also doubled for couples filing jointly, which can further reduce the tax bill.

Gift Tax

Another benefit of becoming a single economic unit after marriage? Spouses are free to exchange unlimited amounts of cash or other assets without the government taxing them.

IRA Beneficiary Options

As with other assets held within a marriage, the funds of IRAs can be passed to a spouse without immediate tax consequences. If you intend for your spouse to inherit your IRAs upon your untimely passing, it’s essential that you name them as the beneficiary of your retirement accounts. 

Remember: the information you supply in your IRAs supersedes the beneficiaries named in wills and trusts. There have been instances where individuals left the names of their ex-spouses on an IRA, depriving the intended recipient of their inheritance.

Other Tax Benefits of Filing Jointly

Married couples filing jointly are granted other tax benefits, which include:

• Education tax credits, such as the American Opportunity Tax Credit, which provides a credit of up to $2,500 per student enrolled in the first four years of higher education, and the Lifetime Learning Credit, calculated as 20% of the first $10,000 in qualifying educational expenses. Married couples earning up to $160,000 can claim the credits, double the income levels of single filers.
• Couples filing jointly may be able to deduct the lesser of $2,500 or the amount of interest you or your spouse actually paid on a qualified student loan during the year.
• Married couples filing jointly who earn up to $400,000 (double the amount for single filers) can claim the Child Tax Credit for each qualifying child.
• The Earned Income Tax Credit (EITC) helps low- to moderate-income workers and families get a tax break. However, it should be noted that the brackets for the Earned Income Tax Credit aren’t much higher for couples filing jointly than they are for single filers.

The Bottom Line

Getting married is a big change to your life and, potentially, your tax bill. Filing jointly often means lower taxes, bigger deductions, and access to more credits, especially for couples with uneven incomes. But in some cases, particularly when both spouses earn higher salaries, the marriage penalty may increase what you owe. The smartest move for newlyweds is to review both scenarios and/or consult a tax professional to determine which option is best for the household.