Marriage Penalty Relief - Finally!
by Carol Loe, CPAWhen both a husband and wife work, and especially if they each make about the same amount in income, they typically pay more in income taxes by being married than if they were single and filing separate returns. In “tax speak” this is referred to as a marriage penalty.
Starting in 2005, the new law provides marriage penalty relief to joint filers in the form of an expanded standard deduction amount and a wider 15% tax bracket. Once the relief is fully phased in, the standard deduction for joint filers will equal double the standard deduction for singles and the upper end of the 15% tax bracket for joint filers will be twice the upper-end limit for singles.
Although billed as marriage penalty relief, these changes apply to all couples who file a joint return. Thus, where only one spouse works, the new law increases the tax advantages of such a couple being married and filing a joint return rather than being unmarried and filling separately.
