Getting Married? Then You Need To Know That The Marriage Penalty Still Exists.
The joys of wedded bliss… that’s until you get to tax time. What is the “marriage penalty”? It’s when a married couple ends up paying more than if they had remained unmarried and filed as single taxpayers.
One byproduct of the IRS Code is that the tax liability or “marriage penalty”, of married couples who file jointly may be more than their combined tax liabilities would be as single filers.
Tax Cuts and Jobs Act (TCJA)
Unfortunately, this “marriage penalty” hasn’t gone away under the Tax Cuts and Jobs Act (TCJA) of 2017. For example, through 2025, the TCJA imposes a $10,000 limit on itemized deductions for state and local taxes. The limit is the same for joint filers and single filers. Consequentially, unmarried couples can deduct $10,000 EACH, for a total of $20,000, while couples can deduct ONLY $10,000.
There have been proposals in Congress to eliminate the limit.
Mortgage Interest
There’s a similar “marriage penalty” on mortgage interest deductions. Through 2025, the TCJA reduced the amount of home acquisition debt that’s eligible for interest deductions fro $1million to $750,000 for debt incurred after December 15, 2017.
Again, the limit is the same for joint filers and single filers, so while married couples may be able to deduct interest on only $750,000 in home acquisition debt, unmarried couples may be able to deduct interest on up to a combined $1.5million.
In conclusion, no one would suggest that a potential marriage penalty should influence your decision to tie the knot. But, knowing the impact can help you make an informed financial planning decision.
Disclaimer
Do your own research. This is not financial or investment or tax advice but for educational purposes ONLY. This information was not intended or written to be used and cannot be used for the purpose of avoiding tax-related penalties prescribed by the IRS Code.
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