Getting married is a significant life transition. Lifestyle, time commitments, and long-term priorities can all shift when you tie the knot. And the same is true for finances—especially how you approach taxes.

There are many tax advantages of marriage. Here are some of the top points our Roundtable™ team speaks to clients about when they decide to get married.

What Are the Tax Benefits of Marriage?

Newly married couples are often showered with gifts from friends and family. Another gift? Tax benefits.

Marriage Tax Benefit #1: Married Filing Jointly

We've all heard the story of the tax accountant who gets married in late December. While taking wedding photos in a winter wonderland is a dreamy prospect, there's a deeper reasoning behind this matrimonial method. Couples that get married at any point during the calendar year can elect to file jointly for that year's taxes. Depending on the couple's individual incomes, this can provide a significant benefit.

Table 1: 2023 Tax Bracket Comparison

If there is a large disparity between the spouses' incomes, or if one spouse doesn't work at all, then the married filing jointly tax brackets can allow them to realize significant tax savings—up to a point. All but one of those brackets are exactly double the single brackets, giving more room for a single earner to fill up the couple's lower brackets. If both spouses bring home similar incomes in the 10%-32% range, the difference between joint and single filing is often negligible.

What Is the Marriage Penalty?

If both spouses are high earners and choose to file jointly, they may encounter the "marriage penalty". The highest tax bracket (37%) kicks in for couples at $693,751, just 20% higher than the single bracket's top level. If both spouses are grossing $350,000+ each, filing jointly can actually hurt their tax position relative to filing separately. For this reason, couples need to analyze the pros and cons of filing jointly before choosing to do so (yet another benefit of marrying a tax accountant is that they have probably already done this).

One final benefit of filing jointly is the practicality: filing a single combined tax return instead of two separate returns saves time. If you hire a tax professional to file your taxes, saved time can equal saved money.

Marriage Tax Benefit #2: The Marital Deduction & Exemption Portability

Married couples have a particularly potent tool for estate planning: the Marital Deduction. The Marital Deduction allows married people to transfer unlimited money to each other at any time, including at death, without triggering any gift taxes.

What is a gift tax? The federal government limits how much everyone can give away annually before tax consequences begin. In 2023, the federal exemption is $17,000 per person, meaning you can give $17,000 to each other individual before the gifted amount starts counting against your lifetime gift tax exclusion ($12.92 million in 2023). As explained above, spouses ignore both numbers when transferring assets between each other.

Furthermore, spouses have an additional benefit. Known as "portability", a surviving spouse can utilize the unused portion of their deceased spouse's estate tax exemption. For instance, if your spouse passed away in 2023 and used $1 million of their federal estate tax exemption to gift assets to someone other than you, you would essentially "inherit" their unused $11.92 million exemption amount and add it to your own. This way, if you pass away later in 2023, you could bequeath $24.84 million to your own beneficiaries without triggering gift taxes.

When you put these two benefits together, you see the potentially massive impact that marriage can have on your estate plan. If you or your spouse passes away, the surviving spouse can gain access to all the decedent spouse's assets with no tax. Then, the surviving spouse can use both of their lifetime gift tax exclusions to pass on even more assets to beneficiaries.

Marriage Tax Benefit #3: Access to Spousal Trusts

Spousal trusts can help you reduce the size of your estate for tax purposes while providing financial security for your spouse and family.

The gritty details of the most common spousal trusts are fairly intricate, but we will say one thing: spousal trusts can provide significant tax benefits while giving spouses extensive creative control over their individual and collective finances. Here's a broad overview of the four most common types of spousal trusts:

1. A Trust (or Marital Trust): A Trusts are irrevocable trusts that take advantage of the unlimited Marital Deduction explained above. Upon death, all assets in an A Trust pass to the surviving spouse automatically without triggering any gift tax.
2. B Trust (or Bypass Trust): B Trusts (also called family trusts or credit shelter trusts) work a little differently but are often used in concert with A Trusts–meaning oftentimes, when a spouse sets up an A Trust, they also set up a B Trust. B Trusts are once again created upon the death of the first spouse, but they're capped at whatever the current estate tax exemption allows. This means they can greatly reduce your estate tax liability, or, if the entirety of the estate is less than the combined exemptions of both spouses, then a B Trust can help avoid estate taxes altogether.
3. Qualified Terminable Interest Property (QTIP) Trust: A QTIP Trust is similar to an A Trust, but the grantor (the now-deceased spouse) essentially retains control of the trust principal after death. The surviving spouse is paid income from the trust at least annually, but the deceased spouse can set specific restrictions on what the surviving spouse can do (if anything) with the principal.
4. Spousal Lifetime Access Trust (SLAT): In a SLAT, a spouse loads a trust with funds that the trust's beneficiaries (often their spouse, but it can include descendants) can access immediately while still effectively removing the trust assets from their estate.

Does Marriage Bring Financial Benefits?

Beyond the tax benefits, marriage can also lead to workplace and Social Security benefits.

Workplace Benefits for Married People

If one spouse works at a workplace that provides health insurance, they can often add the other spouse to their plan, often resulting in thousands of dollars of savings over other marketplace plans. If both members have jobs at workplaces with benefits, they may be able to mix and match their options to build a "custom" plan.

Social Security Benefits for Married People

Married people have two specific Social Security benefits that can be helpful later in life.

Married individuals may be able to receive a portion of their spouse's Social Security earnings by claiming spousal benefits. If eligible, they can receive up to 50% of their spouse's (or ex-spouse's) benefit without impacting how much their spouse receives. This can be especially advantageous for spouses with lower lifetime earnings than their partner, as they can receive a higher benefit based on their spouse's work record—even after their spouse passes away.

After your spouse dies, the surviving spouse may be able to receive survivor benefits (subject to eligibility). Under the right circumstances, the surviving spouse may be able to claim benefits as early as age 60 and receive up to 100% of the deceased spouse's benefit. Survivor benefits can represent a substantial portion of retirement income for widowed spouses, and spouses in retirement can see their own benefits immediately increase after their spouse dies.

Getting Married Changes Your Financial Life

Getting married can change several aspects of your life, financial and otherwise. If you've recently gotten married or are considering getting married soon, it's critical to get on the same page as your partner regarding money.

The expert financial advisors at Wealth Enhancement Group have been advising married couples on their financial situations for decades. Every day, we answer questions about combining finances, saving for future goals, estate planning, tax planning, and more.

We are always eager to apply our valuable experience to your financial life. If you're ready to get started, Wealth Enhancement Group offers free, no-obligation meetings with our advisors to get your questions answered.