That’s simply false. Because the joint brackets are slightly different from the single brackets, if both spouses are making similar incomes, there is a marriage penalty for some ranges of incomes.
I made a severe error in how to use the brackets. I’ll correct and repost.
OK, I’ve corrected the spreadsheet, same location.
New and improved. I added automatic color-coding in the Ranges page to show at a glance when you’re better off filing single. I modified the default to go from an income of $0 to $400K to better include the one-spouse-doesn’t-work-but the-other-is-a-brain-surgeon scenario. But as before you can put in whatever numbers you want and recalculate.
For a polarized income situation, or for lower-income equal-earners, married/joint results in a lower tax. However, it is better to file as single once the lower-income spouse’s income hits around $75K, no matter how much bigger the other spouse’s income is.
But for all other situations the “bonus” goes to the single filers. Isn’t that just another way of saying “marriage penalty”?
No, it’s just that at some points Joint filers pay more, at other points they pay less. Neither is a “penalty” or a “bonus”.
Oh, I didn’t understand you to be making a semantic argument about the word “penalty.” So be it. There is a yearly marriage cost for some couples.
Yes, and I added it. Third set of numbers and a corresponding third graph.
Beautiful. Thanks again.
This is limited data and allows us to make limited conclusions but it appears that over half of married couples have the potential to lower their taxes by divorcing and filing as single. (There is no tongue-in-cheek smiley :)).
I created a color-coded graph with percent of joint filing tax advantages in MATLAB at
http://img147.imageshack.us/img147/8664/marriagetax.jpg
Hope this helps.
Did you add in the effects of the Std deduction and the personal exemption?
No, this was quick & dirty and done with what was at my fingertips. Not a big deal to add those in if I get a chance to look them up.
They make a significant difference.
Which is why actually calculating both scenarios and comparing them is better than a general consideration.
They make a difference, don’t know how you define “significant.”
I have updated the workbook (still the same link) to take into account personal exemptions and standard deductions. I used basic parameters publicized for 2009, but the 2009 worksheets are not available yet (e.g., the maximum deduction allowed for real estate taxes) so some details of the calculations may not match what eventually comes out, but the differences should be very small.
It somewhat broadens the area covered by the benefit to some married couples. But for all couples where each partner makes at least $75K, it costs more to be married.
I opened a thread in GD to further discuss the merits of tax policy on this issue.
Not better if you want to examine a range of incomes, unless you want to plug in 100 different scenarios.
And it is worth noting that the fact that the deductions make a significant difference is exactly what is set to expire next year.
The thread is slightly zombied, but only a couple of weeks and since it’s Tax Day tomorrow, I figure it’s fair game 
Simplest solution might be to just plunk down 30-40 bucks on a copy of Turbo Tax - or try the online version (though that may not let you proceed if your income is above a certain level), and plug in the various scenarios using last year’s income figures. That way you’ll get a pretty good idea of what it would have been like last year, at least. Try Single, Married filing jointly, and Married filing separately.
Obviously this is only as good as the current tax laws and there’s no way of telling what will happen in the future.
I suspect that if you’re both earning similar incomes, you’ll take a bit of a tax hit at the Federal level (not so much at the state level, possibly - my state computes each partner’s income / tax separately). There are financial benefits however, such as guaranteed access to survivor benefits from pension plans and Social Security (I think!), easier inheritance of property and money, and other legal protections offered to married couples.
I assume that the “whether to get married” is more of a “do we fill out this paperwork, or just continue shacking up”… vs “do we get leg-shackled, or do I move on out”.
The formula for “Should we get married?” is
(S/A)(L/D + 1) + T[sup]2[/sup]/(3(C+1)) = T[sub]tk[/sub]
If T[sub]tk[/sub] is above one, you should tie the knot.
T= How many years have you been dating?
L= The number of times per day that something makes you think of this person
C= If your families got together for a holiday dinner, the estimated number of times there would be uncomfortable friction
S= How many shared interests and/or goals do you two have?
A= How many individual or conflicting interests and/or goals do you two have?
D= The average number of disagreements you have with this person in a month
*The above formula is taken from http://geeklogik.blogspot.com/.
If any of you haven’t seen it, there’s a humorous book called [Geek Logik] by Garth Sundem; 50 Foolproof Equations for Everyday Life that has all of those difficult decisions in life boiled down to math formulas.