Biden’s Tax Plan Could Make ‘Marriage Penalty’ Worse

“Are we better off single?” That’s what some high-earning couples may be asking themselves if Congress acts on President Biden’s tax proposal. Here’s why.

A couple have shocked looks on their faces.
(Image credit: Getty Images)

Getting married is likely one of the biggest life decisions you will make, and while it may seem like an easy one, it could just have gotten a little more complicated. In addition to the obvious selection and reflection of a life with a future spouse, and all the family, friends and other things that come with it, there may now be a new consideration to add to the mix: Uncle Sam. That’s because the so-called “marriage penalty” may have just gotten larger for high-earning dual-income households.

Under the recently released so-called “Green Book,” which contains the Department of Treasury’s tax-related proposal for the Biden administration, is a proposal to increase the top marginal income tax rate from the current 37% to 39.6%. This is similar to previous tax increase proposals by President Biden. Specifically, the Green Book provides that the increase, as applied to taxable year 2022, will impact those with taxable income over $509,300 for married individuals filing jointly and $452,700 for unmarried individuals. However, because of the way our tax system and tax brackets work, some married couples who each earn under $452,700 would be subject to a higher tax, as compared to their single counterparts earning the same amount. In this instance, being unmarried and single is better — for tax purposes anyway.

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As part of the Wilmington Trust and M&T Emerald Advisory Services® team, Alvina is responsible for wealth planning, strategic advice, and thought leadership development for Wilmington Trust’s Wealth Management division.

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Alvina Lo
Chief Wealth Strategist, Wilmington Trust

Alvina Lo is responsible for family office and strategic wealth planning at Wilmington Trust, part of M&T Bank. Alvina was previously with Citi Private Bank, Credit Suisse Private Wealth and a practicing attorney at Milbank, Tweed, Hadley & McCloy, LLC. She holds a B.S. in civil engineering from the University of Virginia and a JD from the University of Pennsylvania.  She is a published author, frequent lecturer and has been quoted in major outlets such as "The New York Times."