Failing to renew the Bush tax cuts in the recent “fiscal cliff” legislation has, as we predicted in December, brought back the Marriage Penalty.

A Sun Sentinel report talks to Plantation, FL accountant Sheri Schultz.  Schultz says her family “is facing tax hikes to the tune of thousands of dollars this year.”

How the Marriage Penalty Began

The “marriage penalty” first appeared in 1969. Back then, most households had only one working spouse, so the rule aimed to give a tax break to single-income families. However, the tax code failed to predict the rise of dual-income households as more women entered the workforce.

Today, many families rely on both incomes just to cover their expenses — and the outdated tax system punishes them for it.

Why the Marriage Penalty Hurts

The penalty taxes a family’s second income at a higher rate than if that same salary were taxed separately. In simple terms, married couples earning together end up paying more than two single people who earn the same combined income.

And it doesn’t stop there. Deductions for charitable donations, children, and property taxes start to disappear for couples earning over $300,000. Once household income reaches $450,000, the rate increases by nearly 5%, pushing the total tax burden close to 40%.

Will Couples Avoid Marriage?

Would some couples consider divorce or avoid marriage altogether to dodge the penalty? Probably not. Marriage still brings advantages, like shared health insurance and family stability. But it’s possible that high earners may choose to delay or skip marriage for financial reasons.

The Bottom Line

Despite earlier promises, tax increases have become a reality for many families. It’s hard not to feel misled — yet another example of Washington saying one thing and doing another.