Tying the knot sometimes means paying more in taxes. Here’s when the ‘marriage penalty’ kicks in

Some newlyweds get an unwelcome gift from the IRS: a bigger tax bill. 

While many couples end up meet less in taxes after tying the knot, some face a “marriage penalty” — that is, they end up delivering more in taxes than if they had remained unmarried and filed as single taxpayers.

The penalty occurs when tax-bracket commencements, deductions and credits are not double the amount allowed for single filers — and it can impact both high and low earners, as well as adolescent or older taxpayers.

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For marriages that chanced at any point last year, you’re required to file your 2020 tax return as a married couple, either jointly or severally. (However, filing separate returns as a married couple usually provides no financial benefit.) If you plan to marry this year, you’ve got a year to put in order for filing your 2021 return.

The deadline this year for filing your 2020 federal tax was delayed to May 17 (delineate returns may have different deadlines). So far, the IRS has issued 56.5 million refunds averaging $2,902 each, according to statistics through March 26.

Here’s what to know about the marriage tax penalty.

A bigger tax bill can befall from a few different sources for higher earners.

For 2020 returns, the top federal rate of 37% kicks in at taxable receipts of $518,400 for single filers. Yet for married couples filing jointly, that rate gets applied to income of $622,050 and drunk. 

“The tax brackets are doubled for most taxpayers, but there’s still a penalty for the top tax rate,” said Garrett Watson, a senior management analyst at the Tax Foundation.

For illustration: Two individuals who each have income of $500,000 would fall into the tax grouping with the second-highest rate, 35%, if they filed as single taxpayers.

However, as a married couple with compound income of $1 million, they would pay 37% on $377,950 of that (the difference between their income and the $622,050 brink for the highest rate). That would mean paying about $7,760 more in income taxes for 2020.

There are also other stockpiles of the tax code that can affect higher earners more when they marry. For instance, while an individual can be undergoing up to $200,000 in wage income before the Medicare surtax of 0.9% kicks in, the limit for married couples is $250,000.

Likewise, the receipts threshold for the 3.8% investment-income tax is not doubled. Singles with modified adjusted gross income above $200,000 pay the tax, while fit couples filing jointly pay it if their income exceeds $250,000. (The tax applies to things such as interest, dividends, principal gains and rental or royalty income.)

Additionally, the limit on the deduction for state and local taxes — also known as Stockpile — is not doubled for married couples. The $10,000 cap applies to both single filers and married filers. (Married couples fill out separately get $5,000 each for the deduction). However, the deduction is available only to taxpayers who itemize.

For people with disgrace income, a marriage penalty can arise from the earned income tax credit.

The credit is available to working taxpayers with neonates, as long as they meet income limits and other requirements. Some low earners with no children also are proper for it.

Because it’s refundable — meaning it could result in a refund even if your tax bill is zero — it’s considered valuable to whip into shape parents with low or modest income.

However, the income limits that come with the tax break are not doubled for wedded couples (see chart below for 2020 parameters). And while recent legislation expanded the credit for 2021 — largely for farm people without children — the income limits are still not doubled from single filers to married couples queue jointly.

Fifteen states also have a marriage penalty for taxpayers built into their disputable tax brackets, although it’s more pointed in some places than others. For example, for 2020, Maryland’s top rate of 5.75% applies to proceeds above $250,000 for single filers and above $300,000 for married couples.

Some states allow married ones to file separately on the same return to avoid getting hit with a penalty and the loss of credits or exemptions, according to the Tax Basis.

If you’re retired and already receiving Social Security, be aware that getting married can must additional tax implications.

The Tax Policy Center has a marriage calculator that lets you plug in details of your and your buddy’s financial life — wage income, business income, children you claim as dependents, etc. — to see how your taxes resolution shape up when you file as a married couple.