Q My boyfriend and I have decided to get married within the next six months. We both work and make about the same amount of money. Friends have warned us about the “marriage penalty” when we file joint tax returns. Can you please explain what the “marriage penalty” means? What happens if we get married on Dec. 31?

A First off, your marital status for the ENTIRE year is determined by your marital status on Dec. 31. If you get married on Dec. 31, 2025, the Internal Revenue Service considers you married for all of 2025. Note: you may want to consider a little tax planning to determine if you will be better off getting married in January 2026 … certainly worth a call to your income tax preparer!

The additional tax created by the lumping of spousal income is known as the “marriage penalty.”

This “lumping” often throws income into a higher tax bracket. The tax rate schedule is graduated, the greater the income, the higher the tax rate.

When the second spouse’s income is added to the first spouse’s income, the second spouse effectively loses the benefit of the lower tax brackets: hence, a higher tax liability.

Exacerbating the situation, both spouses generally under-withhold on their Forms W-2 taxes by incorrectly completing their Forms W-4.

The 2001 Economic Growth and Tax Relief Reconciliation Act included provisions designed to eliminate or greatly reduce the marriage tax.

The standard deduction for married couples filing jointly will equal twice the amount of the inflation-adjusted standard deduction amount of a single filer. However, as joint taxable income gets higher, the marriage penalty takes effect, especially in the 37 percent bracket, but to a much lesser degree than under the old law.

Couples in lower tax brackets can also be “penalized” as their combined income may push them out of the Earned Income Tax Credit.

Please note that there can be a “marriage bonus” if one spouse earns significantly more than the other. Getting married and filing jointly may shift the higher earner’s income into a lower tax bracket.

In case you are wondering how we got the marriage penalty in the first place, the answer lies with the society of many decades ago. Back then, our lawmakers never envisioned that married couples would include two wage earners.

The rate tables were designed to give the husband a tax break for being married.

The assumption was that the wife would never earn enough to utilize the lower tax bracket anyway. My, have times changed!

Barry Dolowich is a certified public accountant and owner of a full-service accounting and tax practice with offices in Monterey. He can be reached at (831) 372-7200. Please address any questions to Barry at PO Box 710, Monterey, CA 93942 or email: bdolowich@gmail.com