The marriage penalty in the United States refers to the higher tax rate applicable to the lower-earning spouse when a married couple files jointly, as compared to if the spouses each filed his or her tax return using “single” status.
The percentage of couples affected has varied over the years, depending on shifts in tax rates.
But at the higher end of the tax schedule, there is a penalty for a married couple whose incomes are similar, compared to what they would pay as singles.
In the most extreme case, two single people who each earned $400,000 would each pay a marginal tax rate of 35%; but if those same two people filed as "Married, filing jointly" then their combined income would be exactly the same (2 * $400,000 = $800,000), yet $350,000 of that income would be taxed as the higher 39.6% rate, resulting in a marriage penalty of $32,119 in extra taxes ($16,100 for the 39.6% bracket alone, plus the remainder is due to the higher phase out of the lower brackets.)
An unmarried individual filing a tax return under single or head of household status can choose the deduction method that is most beneficial, but a married couple will be required to use the same deduction method in most cases (Title 26 U.S. Code §63(c)(6)(A)).
In connection with other taxation issues in the United States, one concern is that these marriages are subsidizing one-earner/one-nonearner parent couples in Social Security and Medicare benefits.
[8] The International Monetary Fund has called for the United States, Portugal and France, all countries with significant sovereign debt, to eliminate their practices, including income splitting, that charge 2-earner families higher taxes over single income families (whether married or not).
The marriage penalty can be even worse in cases where one spouse is not a citizen or resident of the United States [citation needed].