1. Bracket breakdown
Say two single individuals lived together in 2011, each with a taxable income of $83,600. They each would pay federal income tax of $17,025, for a total of $34,050. If they got married, their total taxable income would be $167,200, with a tax of $34,886, an increase of $836.
This “marriage penalty” is the result of our progressive tax system. As your income increases, additional dollars are taxed at increasingly higher rates. When two people get married and file jointly, the income of the second spouse is taxed at the highest rate of the first spouse. In the example above, the first dollar earned by the second spouse would be taxed at a marginal rate of 25%. The second spouse has no income taxed at the lower 10% and 15% rates.
More on the marriage penalty
The hit gets more painful as your income increases. Two single individuals, each with a taxable 2011 income of $379,150, would pay tax of $110,016.50 apiece, for a total of $220,033. If they married, the tax cost would become $235,277, a marriage penalty slam of $15,244 — each year!
2. Medical meltdown
Your medical expense deduction must be reduced by 7.5% of your income (adjusted gross). If your potential spouse earns $100,000, filing jointly would cut your medical expense deduction by $7,500. In the 28% bracket, that would suck an additional $2,800 out of your pockets each year.