Marriage tax penalty after TCJA

June 14, 2019

The long-standing, so-called “marriage tax penalty” provides a lower combined income tax liability for an unmarried couple than for a married couple filing jointly, especially when both partners have equal wage income and one or both have dependent children. But when one partner has significantly greater income than the other, couples filing jointly may actually have a tax advantage.

The Tax Cuts and Jobs Act (TCJA) addressed the issue the inequities by equalizing married filing jointly tax amounts with those of two single individuals combined (each with half the amount of taxable income of the joint filers), up to the bottom threshold of the highest tax bracket. The new law left some factors unchanged and actually increased the penalty in other cases.

Know the details of the TCJA’s impact on the marriage tax penalty so you can advise clients accordingly.

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