Married couples are generally required file a joint federal tax return based on their combined income. As a result, husbands and wives with similar incomes usually incur a larger combined tax liability than they would if they could file individually.  However, spouses who have markedly different incomes but file jointly generally face smaller tax bills.

These two possibilities are often referred to as marriage "penalties" and "bonuses." Thus, under 1996 tax law:

• A married couple could face a federal tax bill more than $20,000 higher than what they would pay if they were not married and filed individual tax returns.

• Other couples may find that filing a joint tax return actually reduces their tax bill by more than $4,000.

• Overall, about 42 percent of joint tax return filers are penalized by the tax code, while 51 percent are benefited and 6 percent are unaffected.

Whether a couple incurs a penalty or receives a bonus also depends on the level of their income. Because the Earned Income Tax Credit is phased out as income increases, the married working poor are proportionately hit hardest by the marriage penalty. According to the Congressional Budget Office:

• Couples with incomes below $20,000 who are penalized by the tax code pay nearly 8 percent more of their income in taxes than they would if they could file as singles (see figure at http://www.ncpa.org/pd/gif/marpen.gif).

• But some low-income married taxpayers receive bonuses that average 5 percent of income.

• Because those who got bonuses far outnumber those who incurred penalties, as a group low-income married couples took home a net bonus of $3 billion.

For middle-income couples earning between $20,000 and $50,000, penalties slightly outweigh bonuses by about $1 billion. And high-income couples received bonuses of more than $20 billion in 1996 -- outweighing penalties of $18 billion paid by the group.

There is support for eliminating the marriage penalty; but the CBO points out that under the progressive income tax it is impossible to eliminate the marriage penalty without increasing the tax burden of single filers, and the penalty was unintentionally introduced into the tax code in 1969 to reduce the disproportionate burden on single taxpayers.

Source: “For Better or for Worse: Marriage and the Federal Income Tax,” Congressional Budget Office, Washington, D.C., June 1997.