Do Same-Sex Couples Always Pay More in Taxes?

Every year as the mid-April tax deadline approaches, news outlets are eager to run stories about same-sex marriage and taxes. I’ve noticed another wave of articles after President Obama announced his support for gay marriage last month.

Almost 100% of those articles imply that all same-sex married couples pay more in taxes. But the fact is, same-sex couples do NOT always pay more in income taxes.

In my practice, approximately 65% of my clients in same-sex marriages actually pay less right now by filing as two single people than they would pay if they filed their taxes jointly.

But the 35% who pay more in taxes right now by not being able to file jointly pay much more: marriage discrimination costs those 35% of clients nearly $4,000 in extra taxes each year.

Those of us who work with taxes every day shouldn’t be surprised by this. The “marriage penalty” has historically hit about 50% of opposite-sex married couples — meaning, 50% of opposite-sex couples, historically, end up paying more in taxes as a married couple than they did as two single people.

In presenting the numbers above, I am not saying that same-sex married couples “have it good” on their taxes. THEY DON’T.

As I have said repeatedly, it’s much better to look at the blatant discrimination that same-sex couples face, rather than looking at numbers on a 1040.

Even among those who pay less in taxes now, they still have to jump through ridiculous hoops to meet their tax obligations. Same-sex couples also face disadvantages under gift tax and estate tax laws, and Social Security benefits and retirement planning. Plus the emotional side of being told your government doesn’t recognize your marriage.

Over the course of a lifetime, it’s usually much more beneficial financially to be married. But the results will vary greatly on the bottom line of a 1040 from year-to-year, couple-to-couple, depending on that couple’s situation in that particular year.