It can be also a married person tax depending on your circumstances. If both spouses make similar amounts then they are getting taxed more as a married couple, because the bracket threshold for a married couple are less than 2x that for an individual. I don't understand why everyone is not taxed as an individual, regardless of marital status.
> I don't understand why everyone is not taxed as an individual, regardless of marital status.
Because married couples form a household and it allows them to share child care and work as they see fit.
If you tax individuals, you're encouraging both to earn the same amount of money.
If you tax couples, it encourages the higher earner to keep working, thus you have a higher overall productivity.
Thus you have freedom and higher overall productivity in favor of shared tax burden.
I don't follow. If you encourage both to work, don't you get more total productivity? How does productivity increase by incentivizing one to leave the workforce?
And by encouraging both to work, you'll get more total tax revenue.
> How does productivity increase by incentivizing one to leave the workforce?
Maybe it's a long term strategy? The tax you'll levy on the kid (as the kid and later as adult) is expected to be much more than what you can levy on one partner (during child rearing)?
Taxing as individuals is kind of unfair to single earner households, since the earner has to support more people it seems reasonable to tax them less. You could maybe accomplish a similar thing with deductions but there will still be some weird cases
We have exactly this problem in the UK.
A couple each home earns x, each gets taxed on x. Each gets the tax free allowance on the fist £12.5k of the annual income. Each gets the full basic rate slice before they hit higher bands etc.
If one of the couple earns 2x and the other zero, then only one can use their tax free allowance and they get one slice of the basic rate band etc.
They still have the same pre-tax income for the same household.
Personally I think people should be allowed to opt in to sharing taxable income.
This discourages people joining the workforce and is open to fraud. You will then get the argument of "why should I be taxed more because I'm single"?
Why do we need to push people into the workforce? There are a lot of social benefits to people being stay at home parents (which will be the commonest reason for doing so).
What fraud?
> You will then get the argument of "why should I be taxed more because I'm single"?
You might, but its a dishonest argument. You are taxing households together. You are giving each individual the same amount of tax free income and the same amount in the lower bands.
It is already possible for self employed people to do this by making their spouses a partner or shareholder in the business or similar. This is just extending the same rights to employed people.
Why is taxing households together the correct thing, other than the fact it presumably would improve your personal standard of living (it would also improve mine)? What are you trying to encourage? I could see if you want to encourage families having tax benefits based on children - but universal childcare provision seems more likely to succeed.
And as for not seeing how a tax cut based on 2 people living together could not be abused, you must be very short sighted.
> Why is taxing households together the correct thing
Hypothetically if the household splits up due to a divorce its assets are divided 50:50 (this varies by jurisdiction). Usually (again depending on the jurisdiction) the lower-earning spouse also gets alimony to even up the difference in income resulting from the new situation, at least for a few years.
Clearly then the state believes assets owned and income earned by either one of the couple belong equally to both (something I agree with personally: it's called a partnership). If that's the case, how could it be wrong to tax the household as a single entity?
The fundamental question is whether the primary unit of the society is a household or an individual. If you assume that the society consists of individuals, people should be taxed individually, spouses should be allowed to choose in advance how their assets would be divided in a divorce, and alimony should only be paid to support underage children.
Exactly. Economists usually regard households as basic economic units for good reason.
I think the currently prevailing view is that a household (or a family) is the smallest social structure and the individual is pretty much the opposite of society.
> Why is taxing households together the correct thing
its fairer
> It presumably would improve your personal standard of living
I am divorced and remain single so it would make no difference to me
> could see if you want to encourage families having tax benefits based on children
I want people to enjoy family life. Its the same reason I want family friendly working hours, decent paternity leave, a right to home educate and better schools etc.
> And as for not seeing how a tax cut based on 2 people living together could not be abused, you must be very short sighted.
And as for not seeing how a tax cut based on 2 people living together could not be abused, you must be very short sighted.
Please do explain . Also please find evidence it is abused where tax does work like that. Its not a cut either as many households would pay the same tax, and its likely rates would go up slightly to make it revenue neutral. Its also more consistent as benefits are based on household income in the UK, as are things like student loans and educational bursaries and the treatment of finances in divorce.
"It's fairer" is just tautology.
Student loans are not based on household income and many other benefits aren't either.
As for family life that is covered by basing tax cuts / benefits on children not merely the nebulous concept of a household.
The concept of a household is not nebulous. It is used by economists for a good reason. People in the same household pool income and expenses. The law assumes married couples do so. Parents are jointly responsible for their children.
Really? There are benefits and tax cuts that allow parents to spend more time with their children? Not that I know of.
> Student loans are not based on household income and many other benefits aren't either.
Citation needed. Mine are.
> What are you trying to encourage?
Specialization within the houshold? Because it's conducive to reproduction?
As a mostly single earner in a community property state, my spouse earns half the income for tax purposes. If you were going to tax individuals, it's probably reasonable to apply income evenly across marriages for all states.
I supported a non-earning spouse for a decade in Canada and it's always been a bit murky. Like in 2014-2015 there was a concept of transferring up to 50k of income to the spouse ("Family Tax Cut"), but Trudeau's Liberal gov't canceled it when they came into power; I think they correctly recognized that it was basically a handout to families privileged enough to be in a position where there was enough spread between the two earners that transferring that sum would be significant.
CRA is even pretty careful about letting a spouse claim capital gains income; it's always attributed back to whoever earned the original principal (outside of inheritance). I think the only way around this is to formally "loan" the spouse their investment money, but you have to charge them interest and the interest is of course income to you.
Tax policy is also used a method of encourage certain types of behavior and discourage others. EV Tax Credits and Solar Tax Credits are example of encouraging starting up industries which we need to assist with climate change in economic powered method.
At a broad level, offering benefits for marriage solves political problem, married people tend to vote so need to be catered to. It also solves societal one, marriage tends to be better at extremely broad strokes for society. Married Couples live longer, commit less crime, kids in married households generally have better outcomes and so forth. So politicians in United States decided to incentive it.
I would prefer that tax disincentives existed in the form of excise taxes on things the government doesn't want consumed. Instead of offering EV tax credits, why not offer 0% tax on EVs and 200% tax on ice? Let's get rid of this nonsense 16A and go back to the correct form of federal taxation: excise and/or apportioned if you need a non consumption based tax.
A marriage differential is a mathematical consequence of progressive marginal rates and community property (specifically the ability to shift income between spouses).
To put it another way, eliminating the marriage differential[1] in all cases requires giving up progressive marginal rates or community property.
Which one do you want to give up?
[1] The current US brackets and deductions taxes some married couples more than comparable pairs of individuals, taxes some less, and is basically a wash in other cases. It's easy to move couples between the first two groups and you can move some of each to the third, you can't move all of them.
I just checked the Federal rates and they’re pretty much exactly double from single to married.
Are you in a funky state with bad tax policy?
The threshold rates for a lot of credits, deductions and exemptions are not. Like the Roth IRA is $153k for single, $242k for married. Child care credits have a similar problem if I remember correctly (or they did before my kids grew out of it).
Plus states and counties do it too.
Portland, OR metro gives a $125k threshold to single and only $200k to married filing jointly for supportive housing taxes, which is a 1% tax on income above the threshold.
I have no idea why households that tend to demand less housing (married usually live together) are charged more than singles, who typically demand their own housing at that income level. It makes no sense!
Because households that share housing have more disposable income than individuals living by themselves.
The thought being it's okay to steal from married households because they intentionally set themselves up for lower per partner overhead? Why don't we charge single taxpayers with roommates on the same schedule?
By living in a single house, a married couple demands less housing, which reduces the cost of housing against a fixed supply. Why are we taxing the people making housing cheaper under the guise of "affordable housing"? Shouldn't we treat affordable housing taxes like the carpool lane and reduce the burden of those that are reducing the burden on the constrained supply?
I did a draft of our taxes this week and it was almost exactly the same amount filing married vs separately. Where is the big benefit for filing jointly? I guess if you claim dependents?
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MFS vs MFJ is a whole different thing from MFJ vs 2x Single.
While there's numerous places where MFJ < 2x Single due to various marriage penalties, and even more numerous places where 2x Single < MFJ due to the shared tax bracket space below the 37% bracket....
there are very very few places where MFS > MFJ. They exist, but you have to be in particular situations like one person having disproportionately more debt and on an income based repayment plan, or similar.
There are of course many situations where 2x Single = MFJ = MFS if it's just two similar income W2 employees with no edge cases going on.
(Once you're married, filing 2x Single is obviously not an option)
If one spouse makes significant income and the other does not, it can help drop the high-earner into a lower bracket overall. Not a huge boon, but every penny counts in our household.
A married couple pays the same income tax as two single payers making half the income.
Due to progressive taxation, we tax two people who make $50,000 less than someone who makes $100,000 which is where the tax savings come from.
TIL. All the tax bracket thresholds for married filing jointly are exactly double that of married filing separately, which are the same as single taxpayer, except the threshold for top-most bracket where it switches between 35% and 37%, which is wildly different in favor of single taxpayers. Weird.
What is very strange is that some states let you file jointly to save money on federal income taxes, but file separately for state income taxes and others do not.
Taxation is a strange, mixed-up world.
if its not more evident that taxes are to benefit whatever it is and not what's important. The complex rules that are based on 0 logic.
The calulator doesn't support negative savings. The color is green all the time and even the minus sign is stripped from the large font number.
Try 500k both
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List of caveats I can think of:
* Covers regular federal income tax only. Does not cover any of the taxes on Schedule 2, nor any state/local taxes.
* Assumes both individuals take the federal standard deduction as Single (not Head of Household).
* Assumes no other credits or deductions.
As a result, this can potentially understate marriage penalties for dual-income couples with kids.
https://taxpolicycenter.org/briefing-book/what-are-marriage-...
Also assumes no income based repayment on debt
I don't get it. I keep getting $0. Maybe I'm not using high enough numbers? I used the example of $100k each, or then $100k and $80k, which is on the high side of the median where I live and the single vs. married end up the same.
Marriage benefit comes into play when couples have disparity in income. If you are both at similar incomes, it won't change much. However, punch in 200k and 50k and see the difference.
Unless the disparity is too big. Because then the lesser earning person loses state bennnies.
You are in the same tax bracket at $80 and $100k, so the amount that you would pay would be identical.
Switching tax brackets is a categorical change which needs to occur before there is a difference.
It cost me over $3000 to be married on my 2024 taxes.
I used to be able to declare my house, and my parents' house (I own it). Because of these two things, I have been able to itemize my deductions. In 2024, because I got married, the itemized 'threshold' to reach was higher so I had to take the standard deduction, which ended up costing me a lot more in taxes. It's making me ask questions like "is it worth $3000 every year forever to stay married?"
Your mileage may vary!
I had the same conundrum. It costs me far more to be married than to not be married because of the itemized deduction loses. I used to be able to itemize about $21k. But now that I'm married, the standard $24k wins out, which means our household went from $33k deductions to $24k, and our effective rate ends up being about 30%, so that's about the $3k your are penalized. Plus state income taxes and county surcharges on income above $200k at 1%.
It makes me terribly sad each and every year. And each and every year I have to reconsume stories about the man that flew his plane into an IRS building, and the guy from NJ that threatened an IRS agent on a voicemail and then called back immediately and apologized but still got 12 months. Every year I make a decision to not throw my life away. And every year it's a really tough decision.
If it helps you in talking yourself down from domestic terrorism, IRS is just law enforcement. Killing IRS agents won't lower your taxes, in the same way killing police officers won't legalize anything.
I agree. Which is why I have not yet performed a domestic terrorism. Usually I express my disgust by writing things like "domestic terrorist" in the job title box on my tax return.
But I do give it serious thought, with the quandary normally being: do I have the capacity (and the willingness) to inflict such an impression that I can terrify people from choosing to work for the IRS?
A Federal Tax calculator I made after finding out my tax savings would be $12k if I married my girlfriend.
Divorce is way more expensive than your savings. I went through this; you save $12-16k/yr for 10 years and if you invest the difference smartly, it's $300k.
Without a prenup, and most don't cover earnings during your marriage anyway (They're hard to keep updated yearly), you're giving away half in California, which can be over $1M if you're a diligent saver and investor. Then if your spouse is REALLY nasty, you'll owe her spousal support that can be thousands per month, depending on your income (and income POTENTIAL), for the rest of her life (after 10 years of marriage in CA).
Any cost savings are completely nullified by divorce if you're a high earner and almost never make sense. Don't get married for tax savings, marry for other reasons and have the most iron-clad prenup you can afford and get your partner to agree to. I promise you, your future self will thank you.
Marriage seems like a dated concept from when traditional gender roles were a thing, and men and women worked more as a team because they needed each other. Now that they don’t, with the high divorce rates and the high risks for men I can’t see a reason anyone would want to get married, especially outside the US where there’s minimal tax benefits.
Small correction here, its high risk for the higher earner not men specifically.
Sadly accurate - and what is worse is that child support laws by state [0] are actually even more dated in their mechanisms, where despite using an "income shares" model, most don't take custody & parenting time into account.
So despite "savings" from a MFJ filing status, when you go back to Single filer or HOH filer, you're penalized on the child support side.
[0] https://www.ncsl.org/research/human-services/guideline-model...
Actually, you don't care if your partner agrees to the prenup. You care that your partner's lawyer (you can't have the same lawyer for this) agrees to the prenup. The reason for this is that there are judges that are hostile to prenups and you need evidence that your partner made an informed and explicit agreement.
Also don't add sunset clauses because those are ticking time bombs. There is nothing worse than having a stable marriage only for a looming deadline to change the incentives towards instability.
If you stay married for at least ten years, and one spouse has a significantly better social security record, the other spouse can claim spousal benefits if your marriage is still in force or they are unmarried.
Hard to value that though.
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Depending on circumstances, you might save considerably more in other areas - being covered as a spouse on the other's employer health insurance, reduced car insurance rates, state & local tax savings, ...
12k in savings included about 6k in state tax savings because I am in California. Will add in state taxes if people end up using this
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Tax works differently by country. In many cases there are no mechanism to pool your taxes with your significant other.
Yep! This post was specific to US federal taxes.
If people find this interesting, I will open-source and allow contributions to support other country's tax systems.
If you have to pay NIIT it’s fairly disadvantageous to be married.
If NIIT significantly outweighs the increase in your standard deduction, you probably already have a tax professional for questions.
Idk how you can have a tax calculator around marriage without considering that SALT caps are shared, and not doubled, when married
This is a very good point. I pay more in state income taxes than the $10k cap, which means I don't get any real estate tax write offs. My now wife completely lost her $10k salt deduction after the marriage.
I have hatred for life.
The biggest item on SALT is the real estate taxes and mortgage interest expense. A household has only one address - and thus it makes sense to have tax deduction for just one real estate/ mortgage interest expense. As such it makes sense to share the SALT cap - just like sharing the home.
(also the fact that biggest beneficiaries of SALT are states either high housing costs and these states tend to be Democrat leaning states made it easy for Trump to cap the SALT deduction in his 2018 tax cuts)
My single's tax is approximately two monthly netto salaries per year.
I appreciate this, but now do one for non-traditional, multi-income households.
I’d like solid numbers of how much I’m overpaying to do the work the government refuses to (sheltering folks, ensuring nutritious foodstuffs).
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Zero comments on this linking to diamond rings? Plug in $100,000 and $0, and it suggests some specific diamond rings of roughly that price. I hope that an affiliate link!
Those are not affiliate links.
I just found the idea of the ring being paid for by the IRS funny.
Dammit, they should be!
It's about to get even worse: https://www.cbc.ca/news/world/birth-rate-trump-baby-bonus-1....
I wonder how many more failed tiny financial band-aids it will take before governments figure out that moving the needle on birth rate requires that deep systemic issues be addressed.
The most astute observation I've seen on the topic is that in a capitalistic system in which monetary value is assigned to everything, the value of children is deeply negative and therefore they are not desirable. By having children, most couples are putting their stability, wellbeing, and long-term prospects on the line. The opportunity cost is staggering. If more children is the desired outcome, that tradeoff must cease to exist, and a lousy $2k isn't anything remotely close to that.
Very few people understand the depth of what you just said.
$2K or even $20K is meaningless for a parent making $100K or more.
Kids have a negative value to a professional class member.
If you engage in agriculture or some similar activity, a child as old as 10 can be a helping hand in some way or the other. No surprises that Amish farmers have a high birth rate.
It's not clear exactly what the number is, but if one observes individuals who manage to climb out of the low and middle classes and accrue a certain amount of wealth (somewhere in the ballpark of $600k-$1m net worth and up, maybe), pretty consistently not long after that achievement they've settled down and started a family.
I think for many the desire is there, but sufficient de-risking is required for them to be comfortable with acting upon it.
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$600,000 net worth is nothing these days, I’m worth about that much after saving for 7 years and can’t even afford the mortgage for a $300,000 house, even if I put 20% down.
Investments are so much better at earning money than working for wages, in my case the amount of retirement savings I have after 7 years is larger than my cumulative earnings during the same period, and I’ve been saving about 40% of my gross income. Part of my net worth is ESOP equity that I can’t monetize in any way so that’s part of the reason why my net worth is higher than my earnings over the same period.
I think there's just not enough money in the county to induce more babies. The cost would be a shock. Anyone wealthy enough to shoulder the cost would fight so hard against it, it would never stand a chance. IMO the number is probably something like $10k per year per kid. Foster Care pays somewhere between 8k-12k.
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This is such an important point. As a father of two, children are turning out to be a very large investment...larger than anything else I ever will pour money into, probably by an order of magnitude (though not quite, since I have a house).
I talk to lots of people in SV, heads of design, engineers, as well as folks from around the world that I work with, from San Diego to Argentina and Chile. So many 20-30 year-olds have told me they are never having kids. Life is too fun, and they want to see the world. But training the next generation is hard work, and it's easy to do a terrible job. We want to incentivize people to have kids and be great parents. But that requires voluntary sacrifice, which is a hard sell.
If I hadn't had kids, I could retire now. As it is, I'll be lucky to be able to work and get a job so I can earn for the next couple of decades so I have enough to retire.
$2k doesn't even cover a month of daycare where I live. I pay $4200/month for two kids, and that's with 10% off one for a 2-kid discount.
Get rid of old age benefits and the value will become positive.
That would introduce a new problem of all of those seniors suddenly becoming more dependent on their younger family members, which is exacerbated by kids moving all over the country in search of greener pastures.
There's not really a solution that doesn't involve heavy restructuring in one place or another.
>That would introduce a new problem of all of those seniors suddenly becoming more dependent on their younger family members, which is exacerbated by kids moving all over the country in search of greener pastures.
That's how it always was. It used to be your kids were your retirement safety net.
What's different now than 100yr ago is that those working generations also have the state taking a 20-50% cut which used to be available to be sent home to help out mom and dad.
Those kids are following their parents' and grandparents' 401(k).
They could work longer.
In the UK, for example, the retirement age was set to 60 for women and 65 for men, when life expectancy was substantially lower than today. On the current trajectory, a large number of "boomers" at death will have only "paid into" the system for half their lives, while extracting most of the economic reward of the last 70 years.
Seems about as likely to materialize as every other handout this administration has promised.
How's everyone enjoying their tariff rebate checks? Any servicemembers care to share how they spent their warrior dividend?
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What's going to get worse? Currently parents get absolutely shafted by the tax system as the tax credits are next to nothing relative to the amount of time, effort, and capital it takes to raise a child.
Currently the cost of raising children is privatized while the benefits are socialized.
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Part of it is religion/beliefs.
However, other part of it is entire economic structure is designed to grow or line must go up. Easiest way to make sure line goes up to have more consumers and since many Western Countries have less consumers, this means entire economic system is going to have a reckoning which those in power don't want.
The entire principle of conservatism is basically underpinned by personal insecurities, in every sector. This is why these people are so easy to exploit.
Every healthy living being both male and female has had this obsession since sexual reproduction began over thousand million years ago.
All of your ancestors during a thousand million years have had this obsession.
Are you sure it's not you who are weird?
Okay now factor in the probability of divorce, and the amount you get to keep afterwards, and discount it to present value, vs. paying more taxes and keeping it all. Also remember that you typically lose half of income forever, not just wealth in a divorce.
It is important to understand the consequences of breaking any contract you enter into, including marriage. Luckily, you're not stuck with default terms to that contract, and if you're not comfortable with them pre-nuptual agreements can modify those terms.
Not sure why this is being downvoted. It should be a very real consideration at least in the US.
The best thing I have done in my life was get married and have kids. And money has nothing to do with that happiness.
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What a terrible UX this site is.
Don't make me enter the number or click the button every time.
Just give me a slider for both incomes and show me the result right away.
now what does it cost a man to be married and divorced - the house, half of everything, kids