The Tax Benefits of Having a Spouse: What Couples Should Know
Marriage isn’t just a romantic commitment—it can also offer significant financial advantages, especially when it comes to taxes. Understanding how to leverage spousal tax benefits can help couples reduce their tax liability, maximize deductions, and build long-term wealth. Below, we break down the key tax advantages of having a spouse and how to make them work for your financial situation.
1. Filing Jointly: Lower Tax Rates and Higher Deductions
One of the most immediate benefits of marriage is the ability to file taxes jointly. Married couples who file jointly often qualify for lower tax brackets compared to single filers, which can result in substantial savings. For example, in 2023, the 22% tax bracket for joint filers applies to income up to $190,750, whereas single filers hit that rate at $95,375. Joint filing also doubles the standard deduction ($27,700 in 2023 vs. $13,850 for singles), reducing taxable income upfront.
2. Spousal IRA Contributions
If one spouse earns little or no income, the working spouse can contribute to a Spousal IRA. This allows couples to save for retirement while claiming tax deductions. For 2023, contributions up to $6,500 (or $7,500 if over 50) are permitted, even if the non-working spouse has no earned income. This strategy not only boosts retirement savings but also lowers taxable income in the present.
3. Inheritance and Estate Tax Benefits
Married couples enjoy unlimited marital deductions for estate taxes, meaning assets transferred between spouses during life or after death are not subject to federal estate taxes. This is especially valuable for high-net-worth couples, as it delays estate taxes until the surviving spouse passes away. Additionally, spouses can inherit retirement accounts, like 401(k) plans, with more flexible withdrawal options than non-spousal beneficiaries.
4. Health Savings Account (HSA) Advantages
If one spouse has a high-deductible health plan (HDHP) with an HSA, the family contribution limit doubles to $7,750 in 2023. This allows couples to save more pre-tax dollars for medical expenses. Even if only one spouse is covered under the HDHP, both can use HSA funds tax-free for eligible expenses, providing a shared financial safety net.
5. Tax Credits and Deductions for Families
Married couples with children often qualify for larger tax credits, such as the Child Tax Credit ($2,000 per child) and the Earned Income Tax Credit (EITC), which phases out at higher income levels for joint filers. Additionally, expenses like childcare or education may be deductible or eligible for credits, further lowering tax bills.
6. Business and Investment Benefits
If one spouse owns a business, the other can be employed to shift income and reduce self-employment taxes. Jointly owned investments also allow for income splitting, potentially keeping the couple in a lower tax bracket. For example, rental property income can be divided, optimizing tax rates on passive income.
7. Capital Loss and Gain Flexibility
Married couples can combine capital losses to offset gains more effectively. If one spouse sells an asset at a loss, those losses can offset the other spouse’s gains, reducing overall taxable income. This flexibility is unavailable to single filers.
Conclusion: Maximizing Tax Benefits as a Couple
From filing jointly to optimizing retirement contributions and estate planning, marriage offers numerous tax advantages. However, every couple’s situation is unique—consulting a tax professional can help tailor these strategies to your financial goals. By understanding and leveraging these benefits, spouses can keep more of their hard-earned money and build a stronger financial future together.
