Why Marriage Makes Financial Sense

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.

Penalties and Bonuses

America’s progressive 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.

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.

Tax Changes

Two 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

The American 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 2024 tax year, the credit maximum increased to $7,830, and the tax credit increased to $8,046 in 2025. 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. 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.

When filing separate returns, the head of the household could claim an EITC and a child tax credit. Note that one parent does so, the other parent qualifies for neither credit. This means that the head of the household could be awarded a refund, while the other parent would likely owe tax. Had this couple filed jointly, they would have seen a far smaller EITC but a substantial child tax credit. In all, the point is that the tax benefit of filing married filing jointly as opposed to a different strategy may be complicated (and worth it) for certain taxpayers.

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.

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.

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.

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.

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.

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.