NCPA - National Center for Policy Analysis


August 29, 2008

The marriage penalty is 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 all but eliminated the marriage penalty by lowering tax rates and simplifying other elements of the tax code.  However, these Bush tax cuts expire in 2010, and American families face steep marginal tax increases if Congress fails to renew them, says Daniel Wityk, a research assistant with the National Center for Policy Analysis.

Due to the dramatic shift of women into the labor force over the past 50 years, the marriage penalty affects many families, says Wityk.  For example:

  • In 1970, only 40.5 percent of married women worked, while today 68.8 percent do.
  • Two-earner families now comprise more than half of all families.

Spouses who enter the labor force as a second-earner (usually the woman) are at a particular disadvantage, says Wityk:

  • They are taxed at their spouse's rate even if they only earn the minimum wage.
  • This aspect of the tax system particularly burdens women -- who are more likely to take time out from work to raise the family, either by taking lower-paying jobs with flexible schedules or by staying at home.
  • Adding to the high marginal tax rate on labor are other costs associated with working, such as child care.

In this sense, the marriage penalty is more of a penalty on working than on marriage itself, explains Wityk.  If the marriage penalty returns and couples face higher tax rates, second-earner spouses will have less incentive to work.

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, says Wityk.

Source: Daniel Wityk, "Will Congress Penalize Marriage Again?" National Center for Policy Analysis, Brief Analysis No. 627, August 29, 2008.

For text:  


Browse more articles on Economic Issues