3 Tax Traps That Hit Dual-Income Couples Hard
Written by
Sarah Sharkey
Edited by
Zuri Anderson
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Wedding bells ringing are worth celebrating. But at tax time, some tax rules can hit dual-income couples harder than singles.
GOBankingRates explores some of the ways that the so called ‘marriage penalty’ can make tax season hurt a little bit more. Also look out for these common tax myths — it could impact your tax refund this year.
Higher Tax Bracket
When both partners are working, especially if they have high incomes, their combined income can push their household into the next tax bracket, according to the IRS.
“Couples with higher amounts of income falling into the top 37% tax bracket will pay significantly more taxes compared to two single individuals with the same amount of income,” said Miguel Burgos, certified public accountant (CPA) and expert at TurboTax.
Unfortunately, this can mean that when filing jointly, two high-income earners could end up paying more in taxes than they would have if they had filed individually. Ultimately, this could reduce the household’s take-home pay.
Penalties for Filing Separately
Married couples do have the option of filing separately. But when they take that option, it could disqualify them from taking advantage of different tax strategies.
For example, according to Burgos, filing separately could disallow popular deduction and credit opportunities, like earned income credit, child and dependent care credits and student loan interest deductions.
Make sure to weigh all the costs before filing a separate tax return as a married couple.
Lost Deduction Opportunities
Many deduction opportunities are limited based on income. If a household has two earners, it’s possible that they’ll hit those deduction income limits sooner.
For example, you might be able to deduct up to $2,500 in student loan interest on your 2025 tax return, according to the IRS. As a single person, the income limit is $90,000. For married couples, the deduction opportunity phases out when you earn $180,000 as a household. So, if you earn $60,000 and your spouse earns $121,000, your household income would preclude you from tapping into the deduction opportunity that you could have snagged if you were filing single.
Of course, the tax penalties alone likely aren’t enough to change your mind about marriage — nor should it. But if you plan on getting married or are a dual income household already, consider mapping out your tax planning strategies early in the year to limit your tax liabilities where you can.
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