Marriage Penalty

One reason why marriage penalties persist is that as income rises, many tax credits phase out.

John and Jane, for instance, are biological parents of Sam, who is five years old. John and Jane are both making $30,000.

If they remain unmarried, John and Jane will have to decide who will file as head of household and claim Sam as a dependent, the other parent will have to file as single.

Because they make the same amount of money, who claims Sam is irrelevant, as long as only one does.

If John and Jane stay unmarried their family tax refund would be approximately $2,500 higher, due to Earned Income Tax Credit (EITC). But if they get married, John and Jane will no longer qualify for the (EITC) with a combined income of $60,000.