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Wednesday, August 22, 2012

Sixteen States Have Marriage Penalties

Tax Foundation:  Does Your State Have a Marriage Penalty?:

In a progressive tax system, higher incomes are taxed at higher rates, and in states where the same tax brackets apply to both single and married filers, the effective tax rate on the combined income of two earners can be significantly more than if the two incomes were taxed separately. In 2011, sixteen states had some form of marriage penalty in their income tax system.

Tax Foundation

http://taxprof.typepad.com/taxprof_blog/2012/08/sixteen-states.html

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Comments

California has no marriage penalty for most couples. Only the $1M tax rate has a marriage penalty as far as I know. All the lower income brackets for joint returns are exactly double the single return brackets. This is much more generous to couples than federal joint brackets.

The "some form of marriage penalty" standard is highly misleading.

Posted by: AMTbuff | Aug 22, 2012 3:16:03 PM

Every state that doesn't recognize same-sex marriage has a marriage penalty.

Posted by: Anonymous | Aug 23, 2012 12:08:17 PM

Every state that doesn't recognize same-sex marriage has a marriage penalty.

Incorrect. The definition of Marriage Penalty is the amount by which a couple filing jointly pays more than they would pay separately, filing as singles. If you can't file a married return for whatever reason, you can't be subject to a marriage penalty. By definition.

This is why, for example, two-earner couples often postpone or avoid marriage. As long as they are legally single they retain the ability to file separately at the single tax rates.

Posted by: AMTbuff | Aug 23, 2012 6:55:54 PM