NCPA - National Center for Policy Analysis

Marriage Penalty Relief

June 27, 2003

A marriage penalty results when a married couple pays more income taxes than they would if they remained single. Likewise, a marriage bonus results when a married couple pays less tax than they would if they remained single.

Under the new tax law, most married couples will see some relief from the marriage penalty. However, the new law does not eliminate the marriage penalty entirely for lower- and upper-income couples, says Edward J. McCaffery.

Changes under the new tax law:

  • The 2001 tax act created a new 10 percent tax rate; the income bracket for married couples to pay that rate is twice that of single filers.
  • The 2001 tax act also doubled the standard deduction for nonitemizing couples, but only gradually, reaching the 2x solution in 2009; the new law accelerates the doubling to 2003 and 2004.
  • The 2001 tax act also doubled the income bracket for all married couples in the 15 percent bracket, phasing in these changes between 2005 and 2008; the new law speeds up these tax reforms to take place in 2003 and 2004.

These provisions will eliminate the marriage penalty for most taxpayers; all taxpaying couples above its income levels will benefit from the expanded lower bracket. But marriage penalties have not died. The penalty kicks in again for married two-earner households in the 25 percent bracket (beginning at $114,650 of taxable income), where the income bracket is still 1.6 times as wide as the bracket for single filers.

Source: Edward J. McCaffery, "Marriage Penalty: Relief in the New Tax Law," Brief Analysis, No. 445, June 27, 2003, National Center for Policy Analysis.

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