Tax Policy Center: More Black Couples Incur A Marriage Tax Penalty Than White Couples

Janet Holtzblatt, Swati Joshi & Nora Cahill (Tax Policy Center), Marriage Costs Black Couples More Than White Couples At Tax Time:

We find that 46 percent of Black married couples incurred a marriage penalty under 2018 tax law, compared to 43 percent of white couples.

Conversely, Black couples were less likely to receive a bonus than white couples (36 percent to 43 percent).

Black couples paid an average of $148 more in income taxes due to marriage, while white couples got an average bonus worth $514. Just among those with penalties, Black couples paid more as a share of income than white couples (1.8 percent versus 1.4 percent).

Those findings hold even when the incomes of Black and white couples are similar. For example, relative to white couples, Black couples with adjusted gross income between $50,000 and $100,000 were more likely to face marriage penalties (59 percent to 51 percent) and less likely to receive marriage bonuses (33 percent to 44 percent). Black couples in this income group paid, on average, a net penalty of $358. White couples in this income group received, on average, a net bonus of $61.

To some extent, racial disparities in the tax consequences of marriage are rooted in differences in Black and white couples’ experiences in the workforce and in their family responsibilities.

Marriage penalties are more prevalent among couples when both spouses work than among one-earner couples. And among two-earner couples, marriage penalties are higher the more similar the spouses’ income. That link between work patterns and marriage penalties occurs because the couple’s combined income pushes them into higher tax rate brackets and into the phaseout ranges of certain deductions or credits. 

Janet Holtzblatt, Swati Joshi, Nora Cahill & William G. Gale (Tax Policy Center), Marriage Costs Black Couples More Than White Couples At Tax Time:

Although it is generally blind with respect to race, the tax code can create racial disparities when factors that affect tax liability are correlated with race. In this working paper, we provide new evidence on racial differences in marriage penalties and bonuses in the income tax, using data from eight waves of the Survey of Consumer Finances. Our results support Brown’s (2021) hypothesis that, controlling for income, penalties are more frequent and larger for Black couples than white couples. We link these results to racial differences in income, relative spousal earnings, and the presence of dependents. We examine two policy reforms as well.