Marketplace®

Daily business news and economic stories

I do? Tallying up the marriage penalty in the new fiscal deal

The fiscal cliff deal raises taxes on individuals making at least $400,000 and couples making at least $450,000. Of course, 400 plus 400 does not equal 450. So what's going on?

Correction: An earlier version of this story incorrectly identified Isabel Sawhill’s first name. The text has been corrected.

Under the new deal, if you’re a woman who makes $225,000 a year, and so does the love of your life, your tax rate will be a lot lower — if “Single Ladies” by Beyonce is your theme song.

But, if “Love and Marriage” is more your thing, you may be in for a tax hike. Bob Williams, with the Tax Policy Center says the new top rates include a big marriage penalty, “but not as big as last year,” he says.

In fact, according to Williams, the new tax rates give high earning married couples a bit of a break, compared to the last decade. But slide down the income ladder to the bottom two tax brackets, and at those levels, there’s no marriage penalty under the new tax deal. 

Isabel Sawhill, a poverty expert at the Brookings Institution, says removing barriers for marriage helps reduce child poverty.   

“Two people can combine their incomes, can live more cheaply than one,” says Sawhill.

Sawhill doubts taxes will ever be the deciding factor for popping the question, but she says sometimes, it can tip the balance. 

Related Topics

Collections: