For some unmarried couples living together, it may be in your best interest to wait on saying "I do." Uncle Sam may be giving you incentive NOT to get married. Of course, taxes should never be the primary factor in relationship decisions, but if you’re on the fence anyway…
Say two single individuals live together, each with taxable incomes of $83,600. They each 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.
The hit gets more painful as your income increases. Two single individuals, each with taxable incomes of $379,150, each pay a tax of $110,016.50, for a total of $220,033. If they marry, the tax cost becomes $235,277, a marriage penalty slam of $15,244 -- each year!
Your medial expense deduction must be reduced by 7.5% of your income (adjusted gross income). 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.