For Better or for Worse: How the Tax Overhaul Impacts Marriages

Changes to the federal income tax code may be a mix of good and bad news for married couples.

For Better or for Worse: How the Tax Overhaul Impacts Marriages Photo by Sherry Yates Young /

The politicians behind the Tax Cuts and Jobs Act touted its benefits for families, but the new federal income tax law isn’t necessarily all good news for married couples.

They may still be hit with the so-called marriage penalty, for example. And lawyers say divorces will be nastier due to the changes to the tax code.

Marriage penalties and bonuses

The marriage penalty refers to when a married couple ends up owing more taxes than they would collectively owe if each were single. The marriage bonus is when a married couple owe less than they would if each were single.

Marriage penalties and bonuses aren’t new. In fact, the nonprofit Tax Foundation describes them as a “feature” of the U.S. tax system — albeit an unintended one.

They’re a feature that survived the Tax Cuts and Jobs Act, though. The foundation notes that eliminating marriage penalties and bonuses would require “a significant overhaul of the tax code that drastically changes the current distribution of income taxes paid.”

Meanwhile, a recent Tax Foundation analysis of potential marriage penalties and bonuses for 2018 found that bonuses can be as high as 21 percent of a couple’s income, and penalties can be as high as 12 percent.

‘Taxing’ divorce

The new tax law could make divorce a “more emotionally taxing proposition,” says the American Academy of Matrimonial Lawyers.

A recent survey of AAML members found that 64 percent believe divorce cases will become more acrimonious now that the tax law has changed.

The association attributes this in part to the elimination of the federal income tax deduction for alimony payments, a change that will take effect in 2019.

Madeline Marzano-Lesnevich, president of the AAML, explains:

“The new tax plan will most certainly alter the ways in which divorce cases are settled and couples need to be prepared for these changes. The elimination of the alimony tax deduction has removed a powerful negotiating tool and turned it into a difficult stumbling block for spouses trying to settle a divorce.”

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