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All Contents © 2019The Kiplinger Washington Editors
By Rocky Mengle, Tax Editor
| May 24, 2019Updated July 2019
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.
Lowest Tax Rate: 1%
Highest Tax Rate: 13.3%
Brackets with Marriage Penalty: 2 of 10
Only upper-income couples need to worry about a potential marriage penalty in the Golden State, since the California penalty only strikes couples falling into the state's two highest income tax brackets. And the only reason the marriage penalty pops up at all in California is because the state levies a special 1% tax on taxable income in excess of $1 million. (Revenue from the special tax is used to pay for mental health services in the state.) Without the special tax, there would be no marriage penalty in California.
If you're pushed into the highest tax bracket by the California marriage penalty, then you're going to be paying tax at an eye-popping 13.3% rate. That's the highest state income tax rate in the entire country. But even if you escape the marriage penalty, you're still going to be paying a bundle in taxes if you're a high-income couple in California. That's because California's second- and third-highest rates—12.3% and 11.3%—are also higher than any other state rate in the U.S. Is it any wonder that California is considered one of the least taxpayer-friendly states in the country?
* 2019 brackets are not yet available.
Highest Tax Rate: 5.75%
Brackets with Marriage Penalty: 5 of 6
Couples in the Peach State beware: You have a good chance of facing a marriage penalty on your tax return. Like many states on our list, the penalty affects all but the lowest (1%) tax bracket in Georgia. So just about every married couple has the potential to be hit with the marriage penalty.
The good news is that Georgia's highest tax rate is below average, though not by much. At 5.75% (for 2019), it's tied for the 20th-highest top rate out of the 44 states (including the District of Columbia) with an income tax. However, the rate will drop to 5.5% in 2020 if state lawmakers pass and the governor signs a joint resolution ratifying the decrease during the 2020 legislative session. In addition, the top rate applies to all income over $10,000 for married couples ($7,000 for singles), which is tied for the third-lowest starting point for a top tax bracket in the nation. While that means most taxpayers will be taxed at the highest rate on at least some of their income, it also lessens the impact of the state's marriage penalty (since it's likely you're going to be paying tax at the highest rate whether you're married or single).
Lowest Tax Rate: 2%
Brackets with Marriage Penalty: 7 of 8
Like Georgia, the marriage penalty can hit any married couple in Maryland except for those in the lowest (2%) tax bracket. Also like Georgia, the highest tax rate in the Old Line State is a modest 5.75% (tied for 20th-highest top rate out of 44 states with an income tax). However, Maryland's 23 counties and Baltimore City also levy additional income taxes ranging from 1.75% to 3.2% of taxable income, which offsets the benefit of a middling top rate at the state level.
Unlike Georgia, the top rate doesn't kick in until state taxable income exceeds $300,000 for married couples filing a joint return ($250,000 for single taxpayers). Only nine of the 33 states with graduated income tax rates have a higher starting point for their top tax bracket. As a result, most people aren't paying tax at the highest rate in Maryland. So, if you are kicked up to the highest Maryland tax bracket by the marriage penalty, that's even more of a bummer.
On the bright side, Maryland does allow a deduction for two-income families that can help offset the state's marriage penalty. If a couple files a joint return and both spouses have taxable income, they can deduct up to $1,200 or the income of the spouse with the lower income, whichever is less, on their Maryland income tax return.
Lowest Tax Rate: 5.35%
Highest Tax Rate: 9.85%
Brackets with Marriage Penalty: 3 of 4
Minnesota is another state where the marriage penalty has crept into all but the lowest (5.35%) tax bracket. Unfortunately, the North Star State is not a place where you want to get bumped up into a higher tax bracket, since the rates are so high. Minnesota's highest income tax rate is a whopping 9.85%—the fifth-highest top rate in the country. Even the lowest rate is comparatively high. At 5.35%, only one other state (Maine) hits its lowest-income taxpayers with a higher rate than Minnesota. This helps explain why Minnesota is one of the least taxpayer-friendly states in the nation.
On the other hand, Minnesota does allow a "marriage credit" of up to $1,462 that can help offset any tax-bracket marriage penalty. Married couples filing a joint return can qualify for the credit if both spouses have taxable earned income, taxable pensions or taxable Social Security income; their joint taxable income is at least $38,000; and the income of the lesser-earning spouse is at least $23,000.
Lowest Tax Rate: 1.4%
Highest Tax Rate: 10.75%
Brackets with Marriage Penalty: 3 of 8
New Jersey is pretty good about limiting its marriage penalty to just a few tax brackets. It only pops up in the 1.75%, 8.97% and 10.75% brackets. The state also has a tax rate for joint filers (2.45%) that it doesn't have for single filers—that's weird. We count that as a "no marriage penalty" bracket.
The tax rates themselves in the Garden State provide a bit of a mixed bag. A lot of couples are taxed at relatively low rates, as low as 1.4%. However, guard your wallet if you're a power couple bringing in big bucks. Both joint filers and singles pay New Jersey taxes at an 8.97% rate on taxable income over $500,000 and at a staggering 10.75% rate on anything over $5 million. The 10.75% rate is the third-highest top rate in the nation. But, on the other hand, the $5 million starting point for that tax bracket is the highest in the country, so only a small percentage of taxpayers actually pay the 10.75% rate. That's little comfort, though, if you're one of the unfortunate few bumped up to one of the highest New Jersey brackets because of the marriage penalty.
Lowest Tax Rate: 1.7%
Highest Tax Rate: 4.9%
New Mexico joins the list of states where couples filing a joint return could face a marriage penalty in all but the lowest (1.7%) tax bracket. So, after you walk down the aisle, don't be surprised if your taxes go up.
The state's highest income tax rate (4.9%) is relatively low: the eighth-lowest top rate in the country, to be exact. However, for joint filers, all income above $24,000 is taxed at that rate (above $16,000 for singles). That puts a lot of couples in the highest bracket. But it also lessens the blow if you're tossed into the 4.9% bracket by the marriage penalty, since you're probably going to be paying New Mexico income taxes at the highest rate anyway.
Lowest Tax Rate: 4%
Highest Tax Rate: 8.82%
Brackets with Marriage Penalty: 1 of 8
There's only one tax bracket (6.85%) in the New York tax rate schedules where the marriage penalty looms. As with most other states, there is no marriage penalty in the lowest (4%) bracket. However, what makes the Empire State unique on this list is that a marriage "bonus" is possible for joint filers falling within six (4.5%, 5.25%, 5.9%, 6.33%, 6.57% and 8.82%) of the state's eight tax brackets. A marriage bonus is possible when a bracket's minimum taxable income for joint filers is more than twice the amount for single filers. And, as the name suggests, this means married couples could pay less tax than they would if they were single.
Overall, New York tax rates are high. (The state is considered one of the least taxpayer-friendly states in the U.S.) The state's top rate (8.82%) is the seventh-highest top rate in the nation. At least the rate's threshold is the second-highest top-rate threshold in the country, so there aren't very many people paying tax at that rate. The state's lowest tax rate (4%) is tied for the 12th-highest bottom rate in the U.S.
Couples in New York might be paying local taxes, too. New York City and Yonkers each impose their own separate income taxes. The Metropolitan Commuter Transportation Mobility Tax (MCTMT) is also imposed on taxpayers living in the New York City area. The MCTMT and Yonkers tax are flat-rate taxes. However, the New York City tax is based on progressive tax rates that include the potential for a marriage penalty in three of the four brackets.
Lowest Tax Rate: 1.1%
Highest Tax Rate: 2.9%
Brackets with Marriage Penalty: 4 of 5
Couples escape the marriage penalty in North Dakota if they fall into the lowest (1.1%) tax bracket. Watch out, though, if you fall into any one of the other brackets, because that's where the marriage-penalty trap lies.
Fortunately, no matter how high your income may be, tax rates are relatively low in the Peace Garden State. The highest rate (2.9%) is the second-lowest top rate in the country. Plus, it doesn't kick in for joint filers or singles until you reach $433,200 of North Dakota taxable income. There are only five states with a higher starting point for their top joint filer bracket. In addition, the lowest rate (1.1%), which is among the lowest in the nation, goes all the way up to $65,900 for joint filers ($39,450 for singles). That means more people are paying taxes at the lowest rate. Only one state with graduated income tax rates (Vermont) has a higher joint-filer ceiling for its lowest-rate bracket. Low income taxes is one of the reasons why North Dakota is ranked as one of the most taxpayer-friendly states in the country.
There's even more good news for couples that do get caught in the marriage-penalty trap. Like a few other states, North Dakota allows a "marriage penalty credit" of up to $192 for joint filers if both spouses have qualified income, their joint state taxable income is at least $64,755 and the income of the lesser-earning spouse is at least $38,055. (All dollar figures for the credit are for the 2018 tax year.)
* Brackets are for calculating 2019 estimated tax payments.
Lowest Tax Rate: 2.85%
Highest Tax Rate: 4.797%
The Buckeye State has one set of tax brackets for all taxpayers. If a bracket is the same for single and joint filers, its minimum taxable income for joint filers is automatically less than twice the amount for single filers. So, except for the lowest bracket (0%), each Ohio tax bracket contains the potential for a marriage penalty.
Ohio actually has a fairly low top state income tax rate (4.797%). In addition, the first $21,750 of income isn't taxed. However, practically every city and town in the state tacks on its own income tax ranging from 0.4% to 3%. (Some local school districts add on 0.5% to 2% in income taxes, too.)
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.
Lowest Tax Rate: 0.5%
Highest Tax Rate: 5%
Brackets with Marriage Penalty: 1 of 6
There's some good news for couples in Oklahoma: Only the highest tax bracket (5%) contains the marriage-penalty trap. Since the highest bracket's taxable income threshold for joint filers is only $12,200 (fifth-lowest in the nation), the overall impact of the marriage penalty is also fairly low because most couples will end up paying Oklahoma taxes at the highest rate anyway.
Overall, income taxes are low in the Sooner State. While many taxpayers pay taxes at the top rate (5%), it's a relatively modest top rate compared with other states (tied for 12th lowest in the country). The lowest rate in the state (0.5%) is also the second-lowest bottom rate in the country (although it only applies to the first $2,000 of taxable income).
Lowest Tax Rate: 3.75%
Highest Tax Rate: 5.99%
Brackets with Marriage Penalty: 2 of 3
Rhode Island is another state with one set of tax brackets for all taxpayers. As a result, for each bracket except the lowest bracket (3.75%), the minimum taxable income for joint filers is less than twice the amount for single filers—which is the trigger for a potential tax-bracket marriage penalty.
Overall, the Ocean State's tax rates and bracket thresholds are above average. The state's uppermost tax rate (5.99%) is the 24th-highest top rate among the 44 states with an income tax (including states with a flat tax). The top rate's starting point ($145,600) is the 19th highest among the 33 states with graduated income tax rates. The above-average threshold helps keep many taxpayers out of the top bracket. Rhode Island's lowest tax rate (3.75%) is the 30th highest among the states with an income tax. However, the starting point for the lowest bracket ($64,050) is the 31st highest among the states with graduated rates, which means more people are paying at the lower rate. Since the bracket thresholds otherwise keep comparatively more taxpayers in the lowest bracket and out of the highest bracket, couples paying higher taxes because of the marriage penalty may be even more upset.
Lowest Tax Rate: 3%
Highest Tax Rate: 7%
The Palmetto State also has just one set of tax brackets for all taxpayers. Therefore, the marriage-penalty trap exists for all South Carolina income tax brackets except the lowest (0%) bracket. That's because the minimum taxable income for joint filers is less than twice the amount for single filers in all but the lowest bracket.
The first $3,030 of South Carolina income is not subject to tax. After that, most married couples can expect to be taxed at the state's highest tax rate (7%), which is the 12th-highest top rate in the country. Why? Because the top rate kicks in at just $15,160 of taxable income. That's the sixth-lowest threshold of the 33 states with graduated income tax rates. As noted above for other states, the low threshold also tends to decrease the marriage penalty's impact, since couples are probably going to be stuck paying the top state tax rate anyway, whether they're married or single.
Here's some more good news for South Carolinians who are hitched: The state's two-wage-earner credit can help married couples offset any additional taxes owed as a result of the state's marriage penalty. For the 2018 tax year, the credit was worth up to $233. It's only available to married couples filing a joint South Carolina return, if both spouses have income taxed by the state.
Lowest Tax Rate: 3.35%
Highest Tax Rate: 8.75%
Lovebirds in the Green Mountain State who have said "I do" could get hit by the state's marriage penalty when they file a joint Vermont tax return. That's because the potential for a marriage penalty has crept into all the state's income tax brackets except the lowest (3.35%) one.
Tax rates in Vermont are on the high end, so your tax bill could go sky-high if the marriage penalty does kick you into a higher bracket. Vermont's highest tax rate is 8.75%, which ranks as the eighth-highest top rate in the country. Fortunately, the top bracket's starting point for joint filers is $243,750 ($200,200 for singles), which is the 21st-highest starting point for states with graduated income tax rates. So you need a fairly high income to break into the highest bracket.
The bracket for Vermont's lowest rate (3.35%) is covers a lot of ground, which is good news for lower-income taxpayers. For joint filers, it goes from $0 to all the way up to $66,150 ($0 to $39,600 for single taxpayers). Out of the 33 states with graduated income tax rates, that's the widest initial bracket for joint filers. As a result, more couples end up paying Vermont taxes at the lowest rate.
Virginia is another state where one set of income tax brackets applies to all taxpayers regardless of their filing status. With only one set of brackets, the minimum taxable income for married couples filing a joint return is always less than twice the amount for single taxpayers, except in the lowest (2%) bracket. That means the marriage penalty can sneak up on couples in all Virginia income tax brackets except the 2% bracket.
There is some better news, though. First, Virginia's top income tax rate (5.75%) isn't too high (tied for the 20th-highest top rate out of the 44 states with an income tax). Plus, since the top rate applies to all income over $17,000, which is the seventh-lowest starting point in the nation for a top tax bracket, the marriage-penalty impact is on the low end. That's because you're likely to be paying tax at Virginia's highest rate regardless of whether you're married or single.
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.
Highest Tax Rate: 7.65%
Like many other states on this list, the Wisconsin marriage-penalty trap exists in all the state's income tax brackets except the lowest (4%) bracket. So sweethearts in the Badger State shouldn't be surprised to learn that walking down the aisle could also mean walking into a higher tax bracket.
Rates are high in Wisconsin, too. The lowest rate in Wisconsin (4%) is higher than the lowest rate in most other states (only 11 states have higher bottom rates). The highest rate in the state (7.65%) is also the 10th-highest top rate in the country. Plus, the 6.27% bracket for joint filers is extremely wide (from $31,361 to $345,270), and 6.27% is higher than the top rate in 25 states. So a lot of couples in Wisconsin are going to be paying tax at the 6.27% rate, if not more.
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.