Marriage Bonus vs. Marriage Penalty: How the SALT Deduction Can Tip the Scales

Just over half of married couples end up paying less in taxes after saying “I do.” For others—especially high earners—marriage can potentially lead to a bigger tax bill. The difference comes down to whether you fall into the marriage bonus or marriage penalty category.

For self-employed professionals, this isn’t just a fun tax trivia question. The flexibility you have in managing your income means you can take proactive steps to reduce a penalty or make a bonus even more powerful.

What is a Marriage Bonus?

A marriage bonus happens when a couple pays less total tax after getting married than they would have as two single filers.

• Many couples fall into this category.
• Most common when one spouse earns significantly more than the other.
• Filing jointly blends incomes, often lowering the higher earner’s effective tax rate.
• Can free up cash flow for retirement contributions, debt repayment, or business reinvestment.
• In the right circumstances, the bonus can be a surprisingly strong boost to long-term financial plans.

What is a Marriage Penalty?

A marriage penalty occurs when a couple pays more total tax after marriage than they would have as two single filers.

• Most common when both spouses have high and similar incomes.
• Combining incomes can push more of the household’s earnings into higher tax brackets.
• Certain deductions and credits phase out faster for married couples at high incomes.
• In high-tax states, the State and Local Tax (SALT) deduction can amplify the penalty if the couple’s income triggers a phase-out.

How the SALT Deduction Can Influence the Outcome

The SALT deduction allows you to reduce your federal taxable income by the amount you pay in:

• State and local income taxes
• Property taxes
• Certain sales taxes

2025 SALT rules:

• $40,000 cap for all filers (single or married)
• Phased down for Modified AGI between $500,000 and $600,000
• Drops to $10,000 above $600,000 MAGI

For couples close to or above the phase-out threshold, marriage can reduce the SALT deduction and increase taxable income—adding to the penalty effect.

Example: Marriage Bonus

• Jamie earns a high income.
• Casey earns a much lower income.
• Filing separately, Jamie’s earnings are taxed at higher marginal rates, while Casey’s are taxed at lower ones.

After marriage:

• Their combined income is taxed across more favorable joint brackets.
• They remain under the SALT phase-out threshold, keeping the full $40,000 deduction.
• The result is a lower combined tax bill and more after-tax income to put toward financial goals.

Example: Marriage Penalty

• Alex and Taylor both earn high incomes that are similar in size.
• They live in a high-tax state and pay significant state and local taxes.

As single filers:

• Each keeps more income in lower marginal rates.
• Each claims the full $40,000 SALT deduction.

As married joint filers:

• Their combined income puts them into the SALT deduction phase-out range, reducing their deduction.
• Bracket compression pushes more of their income into the highest marginal rates.
• The result is a larger tax bill than they would have faced separately.

Marriage Bonus vs. Marriage Penalty at a Glance

The tax impact of marriage depends largely on how each spouse earns. 

A marriage bonus is most likely when one spouse earns significantly more than the other, because combining incomes can lower the higher earner’s tax rate. In these cases, most deductions and credits remain intact—or may even improve—and the SALT (state and local tax) deduction typically sees little change. 

In contrast, a marriage penalty often occurs when both spouses earn high, similar incomes. Filing jointly can push their combined income into higher tax brackets, trigger the phase-out of certain deductions and credits, and make the $10,000 SALT deduction cap more limiting, potentially increasing their overall tax bill.

Key Takeaways for the Self-Employed

• Many couples benefit from a marriage bonus, especially when incomes are uneven.
• A penalty is more likely for couples with similar high incomes, particularly in high-tax states.
• The SALT deduction cap and phase-outs can magnify a penalty but are only one part of the picture.
• Strategic income management—through retirement contributions, HSAs, and timing deductions—can help reduce penalty risk or increase a bonus.

Frequently Asked Questions

Do most couples get a marriage bonus?

Yes. According to U.S. Treasury data, just over half of couples benefit from lower combined taxes after marriage.

Does the SALT deduction always affect the marriage penalty?

No. The SALT deduction only plays a role if your state and local taxes are high enough to hit the cap and your income is in the phase-out range.

Can self-employed couples plan around a marriage penalty?

Yes. Self-employed professionals have more control over taxable income through business deductions, retirement contributions, and income timing.

Bottom Line

Whether you see a marriage bonus or penalty depends on how your incomes combine, the tax brackets you land in, and how deductions like SALT apply. For self-employed professionals, flexibility in managing income is a powerful tool. With thoughtful planning, you can make sure your tax strategy supports your long-term goals—whatever your filing status may be.