A Marriage Penalty

A couple with two children and $200,000 in total earnings, split evenly between husband and wife, will incur a marriage penalty of more than $4,900 under 2008 tax law for three reasons. First, the couple has higher taxable income filing jointly than they would have filing separately as single and head of household because itemized deductions phase out with income for high-income taxpayers. Second, the tax brackets for joint returns are less than twice as wide as those for single and head-of-household returns, and therefore much of the couple’s income faces higher tax rates on the joint return. Finally, the couple must pay alternative minimum tax (AMT) of $2,977 when filing jointly, whereas they would pay no AMT if they could file separately as single and head of household. The three factors combine to increase the couple's tax liability by $4,919, or 2.5 percent of their adjusted gross income.