Are there tax advantages to being married? 6 Benefits

When exploring ways to reduce taxable income, being married can financially work in your favor. From higher deductions to easier filing, there are many tax advantages to being married as opposed to single. 

This occurs when you and your spouse file a joint tax return, where both spouses report their income, credits, and deductions together as one filing status. Of course, there can also be drawbacks for married couples, depending on your unique situation. 

Let’s take a closer look at both the marriage tax benefits and considerations to determine which option financially works in your favor.

1. Joint filing tax incentives

In general, married couples who file jointly can take advantage of additional tax benefits, such as credits and deductions, that aren’t always available for individuals who are married but file separate tax returns. This is primarily due to the differing income limits, where you and your spouse may qualify for more tax deductions or credits when filing jointly. 

Common deductions and credits include:

• Child and Dependent Care Credit: Offsets child care expenses if you’re working and need day care or a nanny to watch your child(ren).
• Adoption Credit: For qualified adoption expenses of an eligible child.
• Education Credits: Such as the Lifetime Learning Education Tax Credit and American Opportunity Tax Credit (AOTC) to claim your spouse and child(ren) with college tuition expenses
• Elderly and disabled Credit: Claim a spouse over age 65 or retired on total disability.
• Extra deductions: Ability to claim more deductions from mortgage insurance premiums, charitable contributions, and more.

2. Lower tax rates

Married couples who file jointly have more favorable tax rates. Spouses have a higher standard deduction, which increases the likelihood of paying less in taxes than you would when filing single or separately from your spouse. 

For example, as of 2024, there is a standard deduction of $14,600 for married couples filing separately and single filers. On the other hand, the standard deduction is $29,200 for couples filing jointly. 

When reporting income together, you can earn more money as a couple and pay less money in taxes due to the tax brackets:

3. Health care benefits

If you or your spouse are self-employed, you can take advantage of the tax deduction for health insurance premiums. 

Additionally, when shopping around for health insurance, spouses have access to one another’s plans and better rates. This spousal health care coverage also gives you access to your spouse’s employer-sponsored plans, which works in your favor if you’re not earning an income. 

4. Estate benefits

Some states have community property status, where spouses are considered to be joint owners of almost all property and debts acquired during their marriage.

If you file joint tax returns in these states and you or your spouse passes away, you can inherit the other’s entire estate and assets without owing estate taxes. This transfer of assets between spouses protects the estate and helps you preserve wealth in the family.

5. Retirement saving increase

Legally, single taxpayers who aren’t earning an income can’t contribute to an individual retirement account (IRA). However, if you’re married and don't earn wages, you can still contribute to your own IRA using your spouse’s income. 

Married couples also have a higher income limit for Roth IRA contributions. For the 2023 tax year, the adjusted gross income limitation for spouses filing jointly and qualifying widows is $218,000. The limitation is only $73,000 if you’re married but filing separately, a third of the amount granted for joint filers. 

Since many employers offer company-match retirement benefits, you and your spouse can maximize retirement savings as a couple by contributing to separate IRA accounts.

6. Faster and cheaper process

Lastly, filing taxes can be expensive and stressful for many people. With that in mind, filing one tax return together will take significantly less time and money than filing two separate ones. If you deem tax season a headache, opting to file jointly with your spouse can help you get through the process much faster.

Considerations to filing joint tax returns

Of course, filing taxes jointly may not be for everyone. Depending on your individual situation and financial goals, it may work better for you financially to file separately from your spouse. 

For example, one potential downside is the “marriage penalty,” where your tax bill may increase after filing jointly. This usually occurs when you and your spouse have similar incomes and are above a certain tax bracket.

In this case, filing separately may work in your favor. A few more situations where married filing separately could be beneficial are:

1. A significant difference between incomes
2. Medical expense deduction for one adjusted gross income
3. Avoid tax penalties of one spouse (back taxes, defaulted loans, back child support)
4. Impact on student loan repayment plans

Before deciding on a filing status is best for you, it’s helpful to understand the following two factors.

Joint vs. separate filing status

Taxpayers, including those who are married, may qualify for more than one filing status. In this case, you’ll want to choose the filing status with the lowest tax. For example, filing as “Head of Household” status typically results in a lower tax, but is easier to apply if you and your spouse file separate tax returns, not jointly. 

On the other hand, filing jointly may have lower tax depending on your situation. To qualify as “married filing jointly,” you and your spouse must meet all of the following requirements within the tax year:

• Be legally married by Dec. 31st (or common law married under state law)
• Are not legally separated
• Have a combined income of at least $22,000

Tax implications

As a married couple filing jointly, both you and your spouse will be equally responsible for filing the return and paying the taxes. This means you are also equally responsible for any mistakes, debts, and tax penalties of the other spouse. And, if one spouse is deceased, the IRS will still consider you married to them during that tax year. 

If you or your spouse have a significant amount of debt or expect to pay tax penalties, it may be safer to file separate returns to reduce the risk.

The Playbook take

When it comes down to tax advantages for married couples, joint filing is often the best option due to the abundance of incentives that come with it. That said, you can always consult a financial advisor or tax professional for personalized advice, who can help crunch the numbers and quickly determine which filing status is best for you.

Whether filing jointly or separately, you can still reduce your tax bill with the right financial planning tools.

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