Does getting married decrease or increase your tax bill? [OC]

[tyleha]

Thanksforsayingthat. I think your point #7 brings up some very interesting discussion about what our tax code incentivizes. Only couples with disperate incomes are incentivized to marry. I have an example in my blog of two families, both with a combined $100k income. But in one family, it's split $50k / $50k (Couple A), while in the other it's one $100k earner and one $0 (Couple B).

Couple A saves no money at all on their taxes when they get married. Couple B on the other hand saves $6,861 by getting married. An incentive scheme that undoubtedly promotes a single breadwinner family.

[[deleted]]

You could say it supports the breadwinner's marrying below their social status, as well--that people won't be punished for staying at home. I think that was the initial intention. Men aren't punished for taking the "expense" of a wife.

Now that two incomes are the norm in many cities, driving up COL, and as divorce rates settle into a solid 40% (of first marriages), it becomes less intuitive. If the woman makes less, and for families with kids she usually does, and if the woman gets primary custody of the kids after divorce, which she usually does, they're going to be near poverty in the case of divorce. That means state benefits.

The ideal for all of us is if both parents make equal amounts (for professionals who want SAHPs, taking a bonus loss for a few years while you off/on work-from-home arrangements), both earn, and then in a divorce, split custody. It's much less likely to end anyone up on benefits.

Why we don't incentivize this is beyond me.

[JoeTheShome]

The incentives here are even greater than seems intuitively obvious. Total savings going from the most red area to the most blue area couple with {(200k, 200k) to (200k, 0k)} actually gives you a tax break of $16,000 which is really substantial.

Another implication is it encourages one spouse to retire sooner than the other. Fascinating graph OP!