Of course, you marry for love...but the financial benefits of marriage are nice, too. Whether you're a newlywed or you've reached your golden anniversary, there are a number of money-saving advantages to being married: spousal Social Security benefits, lower insurance rates and the ability to contribute to your spouse's retirement savings, to name a few. But when it comes to federal and state taxes, there's a tax-law twist that can actually cost a married couple money—it's called the "marriage penalty."
A marriage penalty exists when a couple filing a joint return pays more income tax than they would if they were single. In its most common form, the possibility of a marriage penalty is triggered when, for any given tax bracket, the minimum taxable income for joint filers is less than twice the amount for single filers. As a result, when you combine each spouse's income on a joint return, it can push some of that income into a higher tax bracket. This happens most often when the spouses' incomes are similar. For example, two taxpayers each with $100,000 of taxable income in Minnesota would be in the 7.85% tax bracket and pay a total of about $15,700 in state income taxes if filing individually. But as a couple, their combined taxable income of $200,000 pushes them into the state's 9.85% tax bracket, where their total Minnesota income taxes will be about $19,700—a penalty of $4,000 for filing jointly. (A marriage penalty can also be caused by other imbalances in the tax law, such as standard deductions, exemptions or credit phase-out thresholds for married couples that are less than twice the amount for single filers.)
The tax-bracket marriage penalty isn't a huge problem on the federal level anymore. Thanks to the 2017 tax-reform law, only the top federal income tax bracket (37% rate) contains the marriage-penalty trap. However, the marriage penalty is alive and well in several states. So, before you tie the knot or plan on moving to a new state, check to see if you're at risk of paying more in state income taxes as a married couple. To help you out, here are the 15 states (listed alphabetically) where the marriage penalty exists. Plan ahead if you currently live in or plan to relocate to one of these states.
Note: Seven states (Arkansas, Delaware, Iowa, Mississippi, Missouri, Montana and West Virginia) and the District of Columbia eliminate marriage penalties built into their brackets by allowing couples to separately compute the tax owed for each spouse on one return as if they were single. As a result, they are not included in our list of states where a marriage penalty exists.
California
- Lowest Tax Rate: 1%
- Highest Tax Rate: 13.3%
- Brackets with Marriage Penalty: 2 of 10
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Georgia
- Lowest Tax Rate: 1%
- Highest Tax Rate: 5.75%
- Brackets with Marriage Penalty: 5 of 6
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Maryland
- Lowest Tax Rate: 2%
- Highest Tax Rate: 5.75%
- Brackets with Marriage Penalty: 7 of 8
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Minnesota
- Lowest Tax Rate: 5.35%
- Highest Tax Rate: 9.85%
- Brackets with Marriage Penalty: 3 of 4
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New Jersey
- Lowest Tax Rate: 1.4%
- Highest Tax Rate: 10.75%
- Brackets with Marriage Penalty: 3 of 8
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New Mexico
- Lowest Tax Rate: 1.7%
- Highest Tax Rate: 4.9%
- Brackets with Marriage Penalty: 3 of 4
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New York
- Lowest Tax Rate: 4%
- Highest Tax Rate: 8.82%
- Brackets with Marriage Penalty: 1 of 8
QUIZ: Can You Tell If These Tax Deductions Are Legit?
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North Dakota
- Lowest Tax Rate: 1.1%
- Highest Tax Rate: 2.9%
- Brackets with Marriage Penalty: 4 of 5
* Brackets are for calculating 2019 estimated tax payments.
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Ohio
- Lowest Tax Rate: 2.85%
- Highest Tax Rate: 4.797%
- Brackets with Marriage Penalty: 5 of 6
- The Ohio joint filing credit can provide some relief from the marriage penalty. The credit is worth up to $650 for couples filing a joint return if each spouse has at least $500 of qualifying income.
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Oklahoma
- Lowest Tax Rate: 0.5%
- Highest Tax Rate: 5%
- Brackets with Marriage Penalty: 1 of 6
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Rhode Island
- Lowest Tax Rate: 3.75%
- Highest Tax Rate: 5.99%
- Brackets with Marriage Penalty: 2 of 3
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South Carolina
- Lowest Tax Rate: 3%
- Highest Tax Rate: 7%
- Brackets with Marriage Penalty: 5 of 6
* Brackets are for calculating 2019 estimated tax payments.
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Vermont
- Lowest Tax Rate: 3.35%
- Highest Tax Rate: 8.75%
- Brackets with Marriage Penalty: 3 of 4
* Brackets are for calculating 2019 estimated tax payments.
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Virginia
- Lowest Tax Rate: 2%
- Highest Tax Rate: 5.75%
- Brackets with Marriage Penalty: 5 of 6
- There's also a write-off available that can take some of the bite out of the state's marriage penalty. Married couples who file a joint return may be eligible for a deduction of up to $259 if each spouse received income during the year. Joint taxable income must be over $3,000 to qualify for this adjustment.
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Wisconsin
- Lowest Tax Rate: 3.86%
- Highest Tax Rate: 7.65%
- Brackets with Marriage Penalty: 3 of 4
- There is some marriage-penalty relief in the form of a married-couple tax credit. The credit can be as much as $480. To qualify, a couple must file a joint Wisconsin return and both spouses must have qualified earned income. You cannot claim an exclusion of foreign earned income or of income from sources in U.S. possessions on your federal tax return, either.
* Brackets are for calculating 2019 estimated tax payments.
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