April 28, 2003

HHS Report Includes Statistics on State Marriage Tax Policies

The U.S Department of Health and Human Services (HHS) has released its 2002 report on State Policies to Promote Marriage. Along with other marital issues the report includes findings on state marriage tax policies.

For several years now, Home School Legal Defense Association has opposed the federal marriage tax penalty. The federal marriage tax penalty requires married couples to file taxes jointly based on a combined income, which allows these couples to be taxed at a much higher rate than that of an unmarried, cohabiting couple who are filing separately.

On the state level, married couples may face similar penalties. In their report the Department of HHS stated:

  • Fifteen states have no marriage penalty: Of these, nine states have no state income taxes, so the marriage penalty is not an issue, while six states have a flat tax, regardless of income of filing status.

  • Fifteen states have tax schedules that eliminate or reduce penalties. In eight of these, the tax brackets for married couples are twice as wide as those for single filers, so there is no penalty. In the other seven states, the brackets are wider but not doubled, so a penalty is reduced but not eliminated.

  • Nine states also address the marriage penalty by allowing married couples to use one return but pay taxes on separate income as if they were single.

  • In the remaining 12 states, married couples pay a marriage penalty either because the tax is a percent of the federal liability or joint and single return schedules are similar.

In June 2001, President Bush signed a law that gradually decreases and eventually eliminates the federal marriage tax penalty by 2004. Since then, bills to speed up the process have been introduced by members of Congress, but to date have not passed. Unfortunately this is not the case on the state level. According to the Department of HHS, "states that have no mechanism in place to address a possible marriage penalty, the tax threshold can be an issue… As indicated above, families in 12 states face a marriage penalty."

For additional information on the marriage tax penalty, visit HSLDA's online issues library or the Department of HHS report on State Policies to Promote Marriage.