A Marriage Bonus

A couple with two children and $200,000 in total earnings, all earned by the wife, will receive a marriage bonus of more than $8,000 under 2008 tax law. The bonus results from three factors. First, filing jointly, the couple can claim $14,000 in personal exemptions, a third again what they could claim if the wife filed a head-of-household return claiming two children and the husband filed a single return, since in that case the husband, with no earnings, could not use his exemption. In addition, personal exemptions phase out as income rises, further reducing the amount the wife could claim if filing separately, from 10,500 to $10,290. (The phaseout of itemized deductions is the same in both situations.) Second, because tax brackets for joint returns are wider than those for head-of-household returns, much of the couple’s income is taxed at lower rates under joint filing than the 28 percent marginal rate the wife would pay if she filed separately. Finally, the couple would fall under the alternative minimum tax (AMT) under either joint or separate filing, but the AMT would be much larger if the couple filed separate head-of-household and single returns. In combination, the three factors yield a marriage bonus of $8,132, or 4.1 percent of their adjusted gross income. More than half of that bonus would result from the difference in AMT liability.