The Marriage Tax Penalty: What You Need to Know

03.25.2026 | Category: Financial Planning

By: Michelle Owens, JD, CLU®, ChFC®, CEBS
Manager Advanced Markets, Mutual of Omaha

Estimated Read Time: ~7 minutes

Summary: Getting married can change more than your last name. It can also change your tax bill. The “marriage tax penalty” happens when two people pay more in taxes as a married couple than they would as individuals. This guide explains why the marriage tax penalty matters a little less federally, but still impacts in some places.

The One Big Beautiful Bill Act changed the landscape for many taxpayers by making permanent, and even expanding, numerous tax cuts from 2017. For previous decades, the “marriage tax penalty” was a legitimate concern for many couples. Two people could pay more in total taxes after getting married than they would have paid filing as single taxpayers, even though their combined income hadn’t changed.

Today, that penalty has largely disappeared at the federal level, thanks to significant changes in how tax brackets and deductions apply to married couples. However, the story doesn’t end there. In certain situations, and in several states, the marriage penalty is still very real.

Understanding where the penalty has faded, where it remains, and who is most affected can help couples make better tax‑planning decisions.

What Is the Marriage Tax Penalty?

A marriage tax penalty occurs when a married couple filing jointly owes more total tax than they would owe as two single filers with the same incomes. Historically, this happened because married tax brackets and deductions were not aligned with single brackets, pushing married couples into higher tax rates faster.

Why the Federal Marriage Penalty Has Mostly Disappeared

Doubling of Tax Brackets and the Standard Deduction

Under current federal tax law, most tax brackets for married couples are exactly double the single‑filer brackets, and the standard deduction is also doubled. This structural change eliminated the marriage penalty for the majority of households, excluding the higher income tax brackets (i.e., upper 35%-37% tax bracket).

And as a result, most couples filing jointly pay roughly the same or less federal income tax than they would as two single filers.

Who Benefits the Most?

Marriage often produces a tax bonus, rather than a penalty, when:

One spouse earns significantly more than the other
One spouse does not work
Income “splitting” keeps more dollars in lower tax brackets

This is why single‑earner and uneven‑earner households typically benefit from filing jointly at the federal level.

Where the Federal Marriage Penalty Still Exists

Despite these improvements, the marriage penalty has not been eliminated entirely.

1. Very High‑Income Dual‑Earner Couples

At the top federal marginal rate, the marriage penalty reappears. The highest tax bracket is not fully doubled for married filers, meaning two high‑earning spouses with similar incomes may reach the top rate faster when married than they would as single filers. This issue primarily affects couples where both spouses are high earners, rather than households with one dominant income. This currently only impacts couples in the upper 35% or 37% tax bracket.

2. Phase‑Outs of Credits and Deductions

Some tax benefits are not doubled for married couples, causing them to phase out faster than they would for two single filers. Examples include:

Child Tax Credit
Education credits
IRA and Roth IRA income limits
Net Investment Income Tax (NIIT) thresholds

These phase‑outs can create a hidden marriage penalty, even at income levels well below the top tax bracket.

3. The SALT Deduction Cap

One of the clearest remaining federal penalties involves the State and Local Tax (SALT) deduction cap. The current, increased cap of $40,000 is scheduled to expire in 2029, and the deduction phases out for filers with modified adjusted gross income over $500k.

Two single filers may each deduct up to $40,000
A married couple filing jointly is still limited to $40,000 total

For couples in high‑tax states who itemize, this could increase federal taxable income after marriage.

State Income Taxes: Where the Marriage Penalty Still Thrives

Even when federal taxes are neutral or favorable, state income taxes can tell a very different story.

Several states:

Do not fully double tax brackets for married filers
Apply deductions or credits at the return level rather than per person
Create higher effective tax rates for married couples with similar incomes

Because state tax systems vary widely, a couple may face no federal penalty but a meaningful state‑level penalty, depending on where they live.

The Bottom Line

The marriage tax penalty is no longer the widespread federal issue it once was, thanks to bracket and deduction alignment. For most couples, especially those with uneven incomes, marriage often results in a tax benefit rather than a penalty.

However, the penalty has not disappeared entirely. It still affects:

High‑income dual‑earner couples
Households subject to aggressive phase‑outs
Couples impacted by the SALT deduction cap
Taxpayers in states with unfavorable marriage tax structures

For these households, proactive planning, such as income timing, retirement strategy coordination, and state‑specific analysis, can make a meaningful difference.

If marriage changed your tax picture more than you expected, it may be time to review your strategy. Mutual of Omaha also has a wide variety of tools and resources that can help support married couples achieve their financial goals.

Talk with a Mutual of Omaha financial professional to explore strategies tailored to your situation.

Frequently asked questions (FAQs)

Is married filing jointly or married filing separately better for couples?

Most couples save more by filing jointly since it unlocks bigger deductions and credits. But if you have very different incomes or specific expenses like student loans or medical bills, filing separately could sometimes lower your tax. Consulting with a financial professional or tax advisor before you decide whether to file jointly or separately is usually the best way to see which option works for you.

How can married couples minimize estate taxes?

There are several ways to manage your assets and plan ahead, including addressing death taxes in your estate plan and using trusts, exemptions and gifting strategies to reduce potential liabilities.

Can marriage affect eligibility for retirement or healthcare programs?

Combining incomes can change your eligibility for programs like Medicaid, premium subsidies on health insurance or certain retirement benefits. Couples might qualify for less assistance or face higher premiums simply because their combined income exceeds program thresholds.

Can life events like buying a home or having a child change how marriage affects your taxes?

Major life changes can shift deductions, credits and income thresholds. For example, adding a dependent or paying mortgage interest can change how much benefit you get from filing jointly versus separately, and how the marriage tax penalty might apply.

About Michelle Owens, JD, CLU®, ChFC®, CEBS

Manager Advanced Markets, Mutual of Omaha

With 30 years at Mutual of Omaha, Michelle focuses on training and case consultation with advisors on topics including premium finance, Social Security, retirement income, estate and business planning.

Disclosures:

Registered Representatives offer securities through Mutual of Omaha Investor Services, Inc., Member FINRA/SIPC. Investment Advisor Representatives offer advisory services through Mutual of Omaha Investor Services, Inc. Mutual of Omaha Advisors is a division of Mutual of Omaha Insurance Company.

All investing involves risk, including the possible loss of principal, and there can be no assurance that any investment strategy will be successful.

Mutual of Omaha and its representatives do not provide tax and/or legal advice, and the information provided herein is general in nature and should not be considered tax and/or legal advice.

Not all Mutual of Omaha agents are registered representatives or financial advisors.

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