Quirk in Tax Code Penalizes Married Couples with Two Incomes


DALLAS (September 23, 2008) - A new NCPA study examines a quirk in the tax code that pushes married couples into a higher tax bracket than two unmarried single earners living together and earning the same combined income. The 2001 Bush tax cuts virtually eliminated the marriage penalty for low - to - moderate income workers, and mitigated it for higher income earners, but those tax cuts will expire in 2010 if Congress fails to renew them.

Prior to the Bush tax cuts, an estimated 25 million couples paid a penalty for being married in 1999. The Bush tax cuts of 2001 made the income bracket for married couples twice that of single filers for incomes up to the 25 percent tax bracket.

Terry Neese, NCPA Distinguished Fellow and Family Policy Analyst, said the current tax laws need to be renewed before 2011 and updated to allow married couples to file individually without losing the tax benefits associated with marriage.

"With nearly 70 percent of women providing a second income for their family today, they face the decision to either bear a greater share of the tax burden for their choice to pursue a career or stay at home as a homemaker," Neese said.

Link to Marriage Penalty Study: http://www.ncpa.org/pub/ba627/