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If you got married in 2022, you can add “tax return” to the list of things you’ll share from now on.
For some newlyweds, this will mean a bigger tax bill because of a so-called “wedding tax penalty”. This can happen when tax bracket thresholds, deductions and credits are not double the amount allowed for single filers – and it can hurt both high-income and low-income households.
“The penalty can be as high as 12% of a married couple’s income,” said Garrett Watson, senior policy analyst at the Tax Foundation.
For marriages that took place at any time in the last year, the spouses are required to file their 2022 tax returns – due April 18 – as a married couple, jointly or separately. (However, file separate returns financially beneficial to spouses only in certain situations.)
High earners may face several of these penalties
A larger tax bill can come from a few different sources for high earners.
To begin with, for 2022 tax returns, the top federal rate of 37% applies to taxable income over $539,900 for single filers. Yet, for married couples filing jointly, this rate is applied to income of $647,851 or more. (For 2023, these thresholds are $578,125 and $693,750, respectively.)
For example, two people who each have an income of $500,000 would fall into the tax bracket with the second highest rate (35%), if they filed as single taxpayers.
However, as a married couple with a joint income of $1 million in 2022, they would pay 37% on $352,149 of that amount (the difference between their income and the $647,851 threshold for the higher rate) .
“If you both have income in that bracket, you’re going to see a penalty,” Watson said.
Medicare, investment income taxes can also sting
There are also other parts of the tax code that can negatively affect high earners when they marry.
For example, Medicare’s regular payroll tax — 3.8%, which is split between employer and employee — applies to earnings up to $200,000 for single taxpayers. All of the above is subject to 0.9% Medicare supplemental tax. For married couples, this additional tax is $250,000.
Likewise, there is a Investment income tax of 3.8% which applies to single people with a modified adjusted gross income greater than $200,000. Married couples must pay the tax if this measure of income exceeds $250,000. (The tax applies to items such as interest, dividends, capital gains, and rental or royalty income.)
Additionally, the state and local tax deduction limit – also known as SALT – is not doubled for married couples. The $10,000 limit applies to single filers and married filers. (Married couples who file separately receive $5,000 each for the deduction). However, write-off is only available to taxpayers who detail their deductionsand most take the standard deduction instead.
Low-income households may also suffer
For low-income newlyweds, a marriage penalty may arise from the earned income tax credit.
“Credit [thresholds] are not double those of single registrants,” Watson said. “This is particularly concerning for low-income households.
For example, a single taxpayer with three or more children may qualify for a maximum credit of $6,935 with income up to $53,057 on their 2022 return. For married couples, this income cap is not not much higher: $59,187.
This credit is available to taxpayers who work with children, as long as they meet income limits and other requirements. Some low-income people without children are also eligible.
Some states also have the penalty in their tax code
Also, depending on where you live, there may be a marriage penalty built into your state’s marginal tax brackets. For example, Maryland’s top rate of 5.75% applies to income over $250,000 for single filers, but over $300,000 for married couples.
Some states allow married couples to file the same return separately to avoid being hit with a penalty and the loss of credits or exemptions, according to the Tax Foundation.
In the meantime, if you already receive your Social Security retirement benefits, getting married can have tax implications.
For single filers, if the total of your adjusted gross income, non-taxable interest, and half of your Social Security benefits is less than $25,000, you will not owe tax on those benefits. However, for married couples filing jointly, the threshold is $32,000 instead of double the amount for individuals.