Why Do Married Couples Get Tax Breaks?
On the fence about getting married? You might consider tying the knot if you’re looking for significant tax breaks. Why do married couples get tax breaks?
Jan. 31 2022, Published 2:21 p.m. ET
On the fence about getting married? You might consider tying the knot if you’re looking for significant tax breaks. Why do married couples get tax breaks?
The start of tax breaks for married couples goes back to a time when many women stayed home to take care of the kids while their husbands worked and earned an income to support the family.
Back then, states considered community property states allowed married couples to split their income into separate tax returns, which helped put them in lower tax brackets and therefore be subject to fewer taxes. Couples living in non-community property states weren’t so lucky.
So, Congress created the joint tax return as a way to level the playing field and make the rules for married couples filing taxes the same across all U.S. states.
“The modern joint return was enacted in 1948 in order to treat all married couples the same, regardless of where they lived,” Patricia Cain, a law professor at Santa Clara Univerisity, told HopesandFears.com.
The U.S. is the only developed country that enables married couples to file jointly versus as individuals.
There are benefits for married couples to file a joint tax return.
There are many benefits for married couples to file their taxes jointly. For example, married couples filing jointly might fall into a lower tax bracket than if they were filing separately. This is especially advantageous in cases where only one spouse earns an income or one spouse earns less than the other. Most tax brackets for married couples filing jointly have income thresholds equal to twice the threshold for single filers.
According to the tax preparation service H&R Block, filing jointly also enables you to claim more deductions, such as:
Larger deductions for homeownership
Deductions for children and childcare expenses
Deductions for education tax credits
Deductions for student loan interest
Earned Income Tax Credit
As a business owner, you would also benefit from being married because your spouse’s income can help offset if you have a business loss during the year. The tax write-offs for a business loss are less impactful for a single tax filer.
Married couples aren’t subject to the gift tax.
Marriage also enables a couple to give each other money without having to report the exchange as a “gift” on your tax returns. If you aren't married and your significant other gives you over $15,000, they will have to report that money as a “gift” on their tax return and will be subject to a gift tax.
Marriage doesn’t always mean a tax break.
However, marriage isn’t always beneficial for taxpayers, and there are some instances where you could end up paying more in taxes if you’re married. If you and your spouse earn the same annual income or more, your combined income could put you in a higher tax bracket than if you filed taxes separately, which would subject you to a marriage penalty tax.
While this shouldn’t be a reason not to get married, it should be considered when deciding whether to file jointly. The IRS also gives married couples the option of filing taxes separately.
