You’d have to be a very practical person to schedule your wedding around taxes, but most people do think about the financial benefits of marriage before they tie the knot. Your timing can affect how much you pay the IRS—and it’s helpful to understand the impact marriage has on your taxes so you’re not surprised by a huge bill (or refund) come tax season.
Here’s what you should know.
Calculate whether you’ll get a bonus or penalty
Depending on how much you earn, you and your spouse will either get a marriage bonus or a marriage penalty when you tie the knot.
Most couples get a bonus, which means they pay less in taxes by combining their incomes. This is more common when partners earn different amounts—the lower-earning spouse pulls the higher-earning spouse into a lower bracket—or in cases where only one person is earning income.
However, some couples do get a penalty, meaning their combined incomes push their combined household into a higher tax bracket. This usually happens when both partners earn a similarly high or low income. The 2017 Tax Cuts & Jobs Act made the marriage penalty is a little less severe for all but those earners in the top (37%) tax bracket—$622,050 or higher in income for married individuals filing jointly—but it’s still possible to get a penalty if your incomes are similar.
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According to an analysis from the Tax Foundation, marriage bonuses can go up to 21% of your combined income, while marriage penalties top out around 12%.
We’ve written about taxes and marriage in detail, but when it comes to picking the best time to get married, you just need to know whether you’ll get a bonus or a penalty when you wed. The Tax Policy Center’s handy marriage calculator does that math for you.
The IRS considers you married for the entire tax year
When you do your taxes for the first time as a married person, you might be surprised to know that even if you got married in December, the IRS considers you married for the entire year. (The same goes for getting divorced. If you divorce on December 31, you’re divorced for the entire tax year in the eyes of the IRS.)
In other words, your filing status for the entire tax year depends on your marital status as of December 31 of that year. This rule catches many marriage penalty couples off guard because they end up owing more than they realize, especially if they get married at the end of the year.
On the other hand, if you get a bonus, this rule works in your favor. You get a bonus for the entire year, whether you got married in January, July or December.
How to choose a date based on whether you’ll get a penalty or a bonus
If you fall under the marriage penalty umbrella, timing your wedding toward the beginning of the year could help you save money on taxes. For example, if your wedding is in October 2020, and you’re liable to be pushed into a higher bracket, you’ll pay more starting with your 2020 taxes (filed in April 2021).
If you wait a couple of months and marry in January, though, your new, higher tax bracket wouldn’t take effect until 2021, saving you an entire year of paying more in taxes.
Obviously, there’s a lot more that goes into that decision, even financially: the cost of the venue, flight prices for out-of-town guests. Plus, you realize specific tax benefits you get when you marry and file jointly, even if you get the penalty—like a higher exclusion amount on the sale of your home. Postponing your date means you’ll miss out on those benefits for the year, too.
On the flip side, if you’re getting a bonus, you can marry early to take full advantage. For example, you could move your January 2021 wedding to December 2020 so you can squeeze in an extra year of tax savings and benefits. (Of course, that also means you’ll be in wedding mode around the holidays, which sounds like a nightmare.)
Take a look at your withholding before wedding day
No matter when you get married, you should at least understand how your change in status will impact your withholding and your bill.
Robert Westley, a CPA and member of the American Institute of Certified Professional Accountants (AICPA) Financial Literacy Commission, recommends not updating your withholding until after the wedding. If you change your withholding early in the year and then decide not to get married before December 31 (say your wedding is postponed due to a global pandemic), you may end up owing unexpected interest and penalties, he says.
Of course, you can account for this if you prefer. If you expect to get a penalty for the year, adjusting your withholding early ensures you don’t get a huge, surprise tax bill in April. If you expect to get a bonus, adjusting now ensures you don’t overpay your taxes during the year.
To figure out if and how to update your withholding, enter your soon-to-be filing status in the IRS’ tax withholding calculator. If you think your tax liability will change drastically post-wedding, ask your employer if you can update your W-4 to add or remove certain allowances.
The more allowances you claim, the less tax you’ll have withheld. If you’re getting a penalty, you’ll want to remove certain allowances. This means you’ll pay more in taxes during the year, which is ideal if you want to avoid a huge tax bill next April.
Know when to file separately
Westley says that in most cases, couples benefit from filing jointly, as filing separately will generally result in a much higher tax bill. However, there are a few instances where it may be better to file separately—say, if one partner has very high unreimbursed medical expenses, or if one or both partners have an income-driven repayment plan for their student loans.
That’s why it’s important to understand your entire financial picture before making any major changes to your tax plan.
Of course, most of us aren’t going to plan a momentous, presumably once-in-a-lifetime event around our taxes. Still, it’s good to know how your wedding date will affect your finances beyond the money you spend on the event itself. Especially if you’re getting a penalty, it helps to be prepared for all the changes.
This piece was originally published in April 2016 and updated in June 2020 by Emily Long. Our updates include the following: quotes from a CPA, updated recommendations about withholding, an explanation of new tax regulations, updated calculator links and a new lead image.
