Why Marriage Makes Financial Sense (2023)

For many people, marriage brings many benefits, including financial ones. But if you have a significant other who believes that getting married is more of a financial liability than a benefit, don't be surprised because that mindset is more common than you'd think.

There's a long-held belief that married couples pay more in taxes than single people. Not only is this largely untrue for many couples but there are several reasons why marriage makes financial sense.

First, let’s tackle taxes.

Key Takeaways

  • The so-called marriage penalty has not been reformed out of existence but in some instances adjustments to the tax code have eased or erased the penalty.
  • There are a number of financial benefits to marriage, ranging from lower insurance costs to higher mortgage eligibility.
  • The marriage benefits are particularly pronounced for people who have widely different incomes.

Why Get Married?

Getting married makes financial sense, especially for people who have widely disparate incomes. For example:

  • The annual income limitations for IRA contributions by married couples are based on joint income, allowing for far higher savings.
  • A couple's combined income may well place them in a lower tax bracket than the higher-income spouse would pay as an individual.
  • If each spouse has a different employer, each can choose the better of two health insurance plans.
  • Car insurance and home insurance coverage are cheaper for two than for one.
  • In the long run, the lower-paid spouse may be eligible for a larger Social Security benefit than the person's solo income would allow.

Penalties and Bonuses

America'sprogressive tax system can cut both ways for couples. Despite various attempts at reform, a marriage penalty still exists for some couples who earn about the same and are pushed into a higher tax bracket when their family income more or less doubles at marriage. This holds true for both high- and low-income couples.

By contrast, couples in which one partner earns all the income—or significantly more than the other—sometimes benefit from a marriage bonus because the higher earner's bracket drops after marriage, and they end up paying less in taxes than if they'd filed separately as singles.

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In all, marriage bonuses can amount to 21% of a couple's income, while marriage penalties can amount to as much as 12%, according to the Tax Foundation.

Eliminating marriage penalties and bonuses would require a significant rewrite of the tax code that would have far-reaching effects. Instead, lawmakers rely on marriage penalty workarounds.

Social Security Benefits

When married, you may be entitled to retirement benefits from Social Security equaling 50% of your spouse's benefit. If your own benefit is less than 50% of your spouse's benefit, this will apply to you. Qualifying will be dependent on whether specific requirements are met according to the Social Security Administration.

This would also apply to divorcees who are 62 or older, were married for at least 10 years and have not remarried. Additionally, the benefit that a divorcee would receive based on their own work history has to be less than the ex spouse's benefit. Ultimately this provides greater security to the spouse who earned significantly less than the primary wage earner in the household.

Recent Tax Changes

Two recent pieces of tax legislation made significant changes that are of benefit to married couples, particularly those who have children.

The advent of the Tax Cuts and Jobs Act (TCJA), which was signed by President Donald Trump on Dec. 22, 2017, led to several changes to the tax code that were intended to lower corporate, individual, and estate taxes.

Those tax code changes made only small reductions to income tax rates for most individual tax brackets while awarding significant tax reductions to corporations. Moreover, the cuts that benefit individuals are due to phase out in 2025 but will remain for corporations and other entities.

Earned Income Tax Credit

TheAmerican Rescue Plan, signed by President Biden on March 11, 2021, included substantial tax breaks for low- and moderate-income people. For example, in 2021 only, the earned-income tax credit increased to $1,502 for childless households.

For example, for the 2022 tax year, the Earned Income Tax Credit is as much as $6,935 for qualifying taxpayers who have three or more children.

For the 2023 tax year, the credit maximum increases to $7,430.

People without children could claim the earned-income tax credit beginning at age 19 (instead of the previous age of 25), and the upper age limit, 65, was eliminated.

EITC Marriage Penalties and Bonuses

The marriage penalty can be substantial for taxpayers who qualify for the earned-income tax credit (EIC) when one spouse’s income disqualifies the couple. That said, marriage can boost the EIC if a non-working parent files jointly with a spouse who has relatively low earnings.

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A couple with $40,000 in combined income (split 50/50), for example, had a tax penalty of more than $2,357 in 2020, according to the Tax Policy Center. If this couple were not married, one parent could file as head of household with two children, and the other parent would file as single. Under that structure, they would have combined standard deductions of $31,050, which is $6,250 more than the new, aligned $24,800 standard deduction for that income level when filing jointly as a married couple.

When filing separate returns, the head of the household could claim an EITC of $5,779 and a child tax credit of $2,760 (the other parent qualifies for neither credit). This means that the head of the household is due a refund of $8,404, while the other parent owes $760 for a total refund of $7,644. Had this couple filed jointly, they would have seen a far smaller EITC of $2,807 but a substantial child tax credit of $4,000. In all, their refund would be $5,287, which is $2,257 less than if they had been unmarried and had filed separately.

Want to see for yourself? Get your financial documents out and use this tool to calculate whether a marriage would (or does) bring a penalty or bonus for you and your significant other.

Brackets and Phaseouts Aligned

The tax brackets for married couples filing a joint return are now approximately double the single bracket rate at the same income, except for those in the 35% and 37% brackets. This alignment limits a big factor in the marriage penalty, as more married couples filing jointly find that their combined incomes now place them in a lower bracket.

Similarly, the child tax credit phaseout has been aligned, beginning at $400,000 for couples, double the $200,000 phaseout for singles under the Tax Cuts and Jobs Act. Previously, the phaseout was $75,000 for singles and $110,000 for couples, so this change eliminated another potential marriage penalty for couples with kids. But in 2025, these amounts will replace the larger amounts from 2017 unless the law is extended.

Deductible Expenses

Is the opportunity to use someone's unused deductions a reason to marry them? Probably not. But if the owner of a successful business marries someone who is not taking advantage of their tax deductions, they may be able to reduce their tax burden via a write-off. This may also apply to steep medical expenses. Though this may not be romantic, it is a solid tax-planning strategy.

IRA Contributions

The income ceiling for traditional and Roth IRA contributions is far higher for married couples in which one spouse has no income. A spouse of an employed taxpayer can contribute to an IRA even if that spouse has no earned income. That means a couple fitting this description can sock away extra thousands of dollars for retirement (a total contribution for each partner) while achieving significant tax benefits.

And if you’re wondering whether such marriage incentives (and disincentives) have any effect on whether a couple will marry, they don’t. That said, they may influence how much each spouse works.

Alimony Is Not Deductible

While we’re talking about marriage, or rather the end of one, a significant change under the TCJA is that taxpayers who pay alimony after Dec. 31, 2018, are no longer able to deduct their payments as expenses.

However, since Dec. 31, 2018, the recipient of alimony no longer has to claim it as ordinary income on a federal return. Some states tax alimony payments as income.

Health Insurance Benefits

The largest financial benefit of getting married may be the chance to benefit-shop for health insurance. Each spouse has access to the other's plan and can sign up for the better or cheaper of the two.

Generally, coverage can be changed in the 60 days following the marriage.

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Remember that couples who get their health insurance via an exchange must enroll together, although each individual can choose a different plan. If each partner received a subsidy via the Affordable Care Act (ACA) when single, they likely would be penalized once they are married, as their combined salaries could well push them over the cutoff threshold.

Married couples also tend to get big discounts on long-term care (LTC) insurance. This is because couples tend to care for each other at home for as long as possible, reducing the insurer's liability.

As a result of the American Rescue Plan of 2021, all taxpayers with insurance bought on the ACA Marketplace are now eligible for this credit through 2022. Previously, filers were ineligible if their income exceeded 400% of the federal poverty line.

Auto and Home Insurance Benefits

Insurance costs are typically lower for married people. Multi-policy discounts and the lower price that comes with being married are just a few of the insurance benefits.

Other discounts include multi-car policies and bundling homeowners insurance with auto insurance. Some home insurers offer discounts just for being married; be sure to ask once you're hitched.

Bigger and Better Loans for Married People

Two incomes are better than one. If you apply for a $150,000 home mortgage as a single adult, you have only your own income for the bank to consider. A married couple's combined income is likely to qualify for a larger loan with better terms.

Just remember that income isn't the only factor. Lenders also examine credit histories, total debt, and type of debt, as well as the borrower's debt-to-income ratio. So, your spouse's financial history will become as important as your own.

Better Access to Credit

Because everyone's credit score is attached to their Social Security number, getting married doesn't erase or reset your credit history or that of your spouse. Over time, marriage creates a history of joint debts and new accounts, which is also reflected in individual credit histories.

Both credit scores will be factored into the approval process when couples jointly open an account. If one partner has poor credit, both could be out of luck with lenders when opening a joint account, as it could result in a denial or higher rates and fees.

Of course, the opposite is true; if one partner has better credit than the other, their history and habit of meeting payments on time can help the other partner's score. There's also the option of the partner with the better score opening accounts that both will use, though this may not work as well for mortgage applications when two incomes are helpful.

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The upshot is that when someone with poor credit marries someone with good credit, the habits of the person with good credit tend to rub off on the other partner. The fact that many couples can leverage two incomes and combine and reduce many costs also helps improve their finances. So as a couple, you may be in a better position to maintain a solid financial footing or be on a good path toward getting there.

Is the Marriage Penalty for Taxes Real?

The marriage penalty has gradually been eradicated by changes in the tax code.

Some couples may find that they owe more in income taxes when filing jointly than they would have as single filers.

However, this is more than offset by other tax-related factors that make marriage a winning proposition financially. A marriage between two people with widely varying incomes works out particularly well for both partners. The spouse with the bigger income may owe less in taxes when it is combined with the relatively modest income of the other spouse. Meanwhile, the partner with a lower income can qualify for Social Security benefits equal to half of the spouse's income if that amount is greater.

There are other financial benefits unrelated to taxes: Access to larger mortgages, a choice of health care plans, and lower insurance rates are among the marriage bonuses.

Is There a State Marriage Penalty?

There can be. At least 16 states have tax codes that tend to penalize married couples, according to an analysis by The Tax Foundation. This is generally built into their tax brackets. That is, the brackets for couples filing jointly are less than double the brackets for individual filers. Instead of fixing their tax brackets, some states eliminate the penalty by allowing couples to file individually on a single form.

Is Marriage Worth the Tax Break?

Depending on your individual circumstances, marriage may benefit you or your intended, or both. Your overall cost of living might well be reduced if you're sharing the expenses of a mortgage or rent, and insurance, You also have a better chance as a couple to put aside a substantial amount towards retirement.

The Bottom Line

Getting married and staying married for the long term brings the opportunity for more financial security, provided that each spouse practices good family financial habits.

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Don't spend more than you have and limit—or eliminate—the use of credit cards. Also, do your research on managing money as a couple, which is a little more complex than you might think. Don't skip having an honest talk about spending habits, money anxiety, and goals.


Why Marriage Makes Financial Sense? ›

A couple's combined income may well place them in a lower tax bracket than the higher-income spouse would pay as an individual. If each spouse has a different employer, each can choose the better of two health insurance plans. Car insurance and home insurance coverage are cheaper for two than for one.

Why is marriage important financially? ›

Married couples who file their tax returns jointly may qualify for higher tax deductions and credits than single filers. This is beneficial because you'll also be combining your incomes on a joint tax return. And if you own a home together, the exclusion for taxes on the proceeds of the sale is doubled.

Why does marriage build wealth? ›

While cohabitating couples are more likely to split expenses, married couples generally pool their resources. Combining the money available for savings allows couples to see greater returns on investments. Married couples are also more likely to buy a house rather than rent.

Can a marriage survive financial problems? ›

Even with the best budgeting, financial problems can still happen. Don't let it take away the happiness in your relationship. Talk openly, prioritize your spending, set goals, and accept help. This will help you blend marriage and finances in a way that does not leave you wishing for a divorce.

Should a husband support his wife financially? ›

In an ideal partnership, if both the spouses are earning, they should contribute to the household expenses or finance joint assets in the proportion that they earn.

Is it financially smarter to be married? ›

The fact that many couples can leverage two incomes and combine and reduce many costs also helps improve their finances. So as a couple, you may be in a better position to maintain a solid financial footing or be on a good path toward getting there.

Who benefits the most from marriage? ›

These cultural stereotypes persist despite evidence that marriage serves men much more than women in almost every way. Married men are better off than single men; they are healthier, wealthier, and happier.

Do most marriages end because of money? ›

Money is widely known as one of the leading causes of divorce in America. It's estimated that financial problems contribute to 20-40% of all divorces. That means that for every 10 marriages that end in divorce, four of them are because of money.

Why married couples are more successful? ›

By combining resources and splitting costs, married people have the edge on all kinds of day-to-day expenses in addition to rent or mortgage: One cable bill, one utilities bill, and shared groceries can all lead to big savings.

What are the five benefits of marriage? ›

The Top 5 Benefits of Creating a Happy Marriage
  • #5: Personal Growth. The research consistently shows that a happy marriage enables spouses to grow, both individually and as a couple. ...
  • #4: Health. ...
  • #3: Longevity. ...
  • #2: Life Satisfaction and Purpose. ...
  • #1: Happiness (and Consequences Thereof)
Jul 18, 2018

Should a wife pay all the bills? ›

While not everyone believes that a relationship should be 50/50, paying half of a couple's expenses is a good start. Of course, there's no right or wrong way to do things, but what's most important is that you and your partner are on the same page about your finances.

What are financial red flags in a relationship? ›

Missing bill payments or not paying them in full is the No. 1 financial red flag identified by the survey. “Developing the habit of paying your full balance by the deadline will serve you well in the long run and prevent accruing late fees,” Hines Droesch said.

How much should a wife contribute financially? ›

Instead, Long says, do some math. Make a list of all your combined expenses: housing, taxes, insurance, utilities. Then talk salary. If you make $60,000 and your partner makes $40,000, then you should pay 60 percent of that total toward the shared expenses and your partner 40 percent.

How important is financial stability in a marriage? ›

Financial stability is a crucial factor in a healthy relationship and having a stable source of income can provide peace of mind and security. Being employed can also indicate a strong work ethic and responsibility, which are important qualities in a partner.

Is money an important factor in marriage? ›

Money plays a huge role in shaping a relationship, especially in a marriage, since financial dispute is one of the predictor of divorce. Most marriage difficulties are due to money. To start, the more money you spend on the wedding can determine the duration of marriages. A study done by Andrew Francis-Tan and Hugo M.

What is more important in marriage love or money? ›

It is the only emotion that has the power to be eternal, whereas money is just temporary happiness. You may buy things, travel anywhere, be powerful but you can never buy love. That's all the difference it takes. And so, we have listed down a few reasons why you should choose love over money.

What does marriage mean legally financially? ›

Legally married couples are able to take advantage of a number of financial benefits, including being able to file joint tax returns, splitting income and pensions, and being entitled to certain government benefits.


1. A Married Couple Explains Combining Their Finances
(Insider Business)
2. The Real Reason for Marriage - Prof. Jordan Peterson
(Jordan Peterson Fan Channel)
3. Why Would Men Bother With Marriage Today?
(Andrew Klavan)
4. Financial Solvency - Hidden Attack on Marriage (Pt5) #kingdomFinance #kingdommarriage #kingdomwisdom
(LoveFaithPeaceBlessings: LFPB Ministries)
5. Why Bother With Marriage?
(The School of Life)
6. Bill Maher: I've Never Understood the Concept of Marriage
(JRE Clips)
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