COLUMN: Removing Ohio's Marriage Penalty
September 4, 2019
“I do.” These two little words promise a lifetime of commitment and in a few states, a larger state income tax bill.
Unlike the federal government, which, after the passage of the Tax Cuts and Job Act, for the most part ensures the fair treatment of married couples by allowing them to file based on separate joint filer brackets. Research from the Tax Foundation indicates that fifteen states in the U.S. still penalize working, married couples by taxing them more heavily than they would otherwise if that same couple simply lived together. Ohio’s marriage penalty results from our state only using one progressive personal income tax bracket; regardless of whether it is an individual filing singly or a married couple filing jointly. Married couples who both have earned incomes and file jointly in Ohio pay more state tax than they would pay if they filed singly because their incomes are added together, catapulting them into a higher income tax bracket.
Our state implicitly acknowledges this unfair quirk in our tax system through a joint filer credit designed to offset some of the marriage penalty, but even that partial solution is inadequate as it only offsets a small portion of the overall penalty. In other words, even when claiming the joint filer credit, working married couples in Ohio still pay more in taxes than two individuals who live together and file as a single.
For example, in Ohio the combined median income for a working married couple in 2017 was slightly less than $80,000. Taking this median married couple as an example, current Ohio law dictates that they must pay about $1,900 in state taxes. However, if this same couple wanted to avoid Ohio’s marriage penalty and chose simply NOT to marry, they could still live together and save almost $600! Cumulatively, this marriage penalty in Ohio amounts to approximately $650 million annually statewide. Unfortunately, this strange peculiarity in our tax system is not unique to Ohio. According to the Tax Foundation, 15 states currently have a similar marriage penalty embedded in their state income tax system.
In a world clamoring for answers and seeking security, strong families are critical to a stable society and promoting a brighter future for our children. There is broad bipartisan support for strong families as both the 2016 platforms for both the Republican and Democratic parties mention supporting or protecting families 72 separate times. Nor would many people dispute that strong marriages produce strong families. It is perplexing, therefore, that a number of states still discourage couples from making the lifelong commitment of marriage by failing to structure their tax systems in a manner that at the very least won’t punish them for their vows.
So, in the spirit of commitment to the idea that it’s your money first and not the government’s money, I vow to work with my colleagues to repeal the marriage penalty in Ohio.