Marriage Penalty

AAA

DEFINITION of 'Marriage Penalty'

The increased tax burden for married couples compared to when they were filing seperate tax returns as singles. Progressive tax rate structures in the United States led to a situation where higher income individuals and couples pay higher taxes than their lower income counterparts. The marriage penalty has been at the center of many political debates and the United States governement has taken steps to resolve the taxation discrepency.

BREAKING DOWN 'Marriage Penalty'

The fact that married couples tend to pay more in taxes than single filers is debatable. However, some believe that the marriage penalty has led to greater consideration by couples to avoid marriage.

RELATED TERMS
  1. Income Tax

    A tax that governments impose on financial income generated by ...
  2. Marital Deduction

    A tax deduction that allows an individual to transfer some assets ...
  3. Head Of Household

    A status held by the person in a household who is running the ...
  4. Standard Deduction

    A base amount of income that is not subject to tax and that can ...
  5. Marital Property

    A U.S. state-level legal distinction of a married individual's ...
  6. Equitable Division

    A legal theory that guides how property acquired during the course ...
Related Articles
  1. Taxes

    Before You Visit Your Tax Preparer: Do This

    The earlier you start preparing your tax records and documents, the more likely you are to have a smooth tax return experience – and all the tax benefits you're due.
  2. Taxes

    Happily Married? File Taxes Separately!

    Just because you are in love doesn't mean that a joint return is best for both of you.
  3. Taxes

    10 Money-Saving Year-End Tax Tips

    Getting organized well before the deadline will curb your frustration and your tax liability.
  4. Professionals

    How to Bring Up a Prenup with Clients

    Prenups aren't just for the rich. Here's how to help clients agree to one if you think they'll benefit.
  5. Professionals

    Advisors: Ignore a Spouse at Your Own Peril

    Financial advisors have their work cut out for them when it comes to keeping a spouse or partner in what was formerly a couple-client relationship.
  6. Credit & Loans

    Joint Credit Cards: The Pros and Cons

    A joint credit card may sound like an easy way to split the bills, but make sure you know what you’re getting into first.
  7. Professionals

    How Married Couples Can Maximize Social Security

    Making the most of Social Security can be a complicated thing for married couples, but finding the maximum return is worth the laborious process.
  8. Professionals

    Couples: Avoid These 3 Big Financial Mistakes

    Money is one of the top reasons couples argue. Here are the major issues advisors need to be aware of to help couples avoid common financial mistakes.
  9. Taxes

    Gay Couples: Here Are Your New Rights

    The expansion of same-sex marriage means gay and lesbian partners can now enjoy basic spousal rights, regardless of where they live.
  10. Taxes

    Gay Marriage and Taxes: Everything You Should Know

    Same-sex couples now have a variety of tax strategies to consider.
RELATED FAQS
  1. Can I add my higher income spouse's name to my Roth IRA in order to raise our contribution ...

    IRS rules prevent you from maintaining joint Roth IRA accounts. However, you may accomplish your goal of contributing larger ... Read Full Answer >>
  2. What are Social Security spousal benefits?

    Social Security spousal benefits are partial retirement or disability benefits granted to the spouses of qualifying taxpayers.  Qualifying ... Read Full Answer >>
  3. Are Social Security benefits affected by marriage?

    The amount of Social Security benefit you are eligible to collect upon retirement is not affected by marriage. Your benefit ... Read Full Answer >>
  4. How can I protect my business from my spouse during a high net worth divorce?

    For high net worth individuals (HNWIs), deciding to end a marriage through divorce brings special circumstances to consider. ... Read Full Answer >>
  5. When is litigation better than mediation in a high net worth divorce case?

    Typically, litigation is better than mediation in high-net-worth divorce cases for two major situations – when there are ... Read Full Answer >>
  6. Why are high net worth divorces considered more challenging than other divorce cases?

    All divorces are emotionally difficult and create a financial strain on the parties involved. As it pertains to dividing ... Read Full Answer >>

You May Also Like

Hot Definitions
  1. Tiger Cub Economies

    The four Southeast Asian economies of Indonesia, Malaysia, the Philippines and Thailand. Tiger cub economy indicates that ...
  2. Gorilla

    A company that dominates an industry without having a complete monopoly. A gorilla firm has large control of the pricing ...
  3. Elephants

    Slang for large institutions that have the funds to make high volumes trades. Due to the large volumes of stock that elephants ...
  4. Widow's Exemption

    In general terms, a widow's exemption refers to the amount that can be deducted from taxable income by a widow, thereby reducing ...
  5. Wedding Warrant

    A warrant that can only be exercised if the host asset, typically a bond or preferred stock, is surrendered. Until the call ...
  6. Marlboro Friday

    A reference to Friday, April 2, 1993, when Philip Morris, the maker of Marlboro cigarettes, announced that it would be cutting ...
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!