Legal Definitions - marriage bonus

The term marriage bonus refers to a situation in tax law where a married couple pays less in total income tax by filing a joint tax return compared to the amount they would have paid if each spouse had filed as a single individual.

Essentially, it's the financial benefit, or tax savings, that a couple receives due to the structure of tax brackets and deductions for married couples filing jointly, often occurring when there is a significant difference in income between the two spouses.

• Example 1: High Earner and Non-Earner

  Maria is a successful software engineer earning a substantial salary, while her spouse, Carlos, is a full-time student with no taxable income. If Maria were to file as a single individual, her entire high income would be subject to the single filer tax brackets, with a significant portion potentially falling into higher tax rates.

  However, when Maria and Carlos file their taxes jointly, their combined income (which is essentially Maria's income, as Carlos has none) is assessed against the wider and often more favorable tax brackets for married couples filing jointly. This typically results in a lower overall tax liability for the couple than if Maria had filed alone. The difference in the total tax paid – the amount saved by filing jointly – is their marriage bonus.

• Example 2: One Primary Earner, One Part-Time Earner

  Consider Jessica, who works full-time as a marketing manager with a good salary, and her spouse, Michael, who works part-time and earns a modest income. If Jessica filed as a single person, a larger portion of her income would be taxed at higher marginal rates.

  By filing jointly, Jessica and Michael combine their incomes. Because Michael's income is relatively low, their joint income effectively "fills up" the lower joint tax brackets more efficiently than if Jessica's higher income were solely filling the single person's brackets. This often leads to a lower total tax bill for the couple than if Jessica filed single and Michael filed single. The amount of tax they save by filing jointly, due to their combined income being taxed more favorably, represents their marriage bonus.