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Still, even without income-tax breaks, there are plenty of financial benefits to marriage, regardless of their income-tax situation. Among them:
- Workplace health and pension benefits coverage. Though some companies offer health coverage to domestic partners, this benefit is typically taxable as income. When spouses are covered, the benefit is tax-free.
- Social Security retirement and survivor benefits. A husband or wife is entitled to one-half of the spouse's Social Security benefits and to additional benefits in the event of death.
- Lower insurance rates. Married people usually get a discount on auto insurance and may pay less for other types of insurance.
- Automatic inheritance rights. Die without a will, and your spouse gets your stuff. In many states, the surviving spouse has a legal right to at least one-third to one-half of your estate.
- Preferential estate-tax treatment. The richer you are, the better the deal this is. Essentially, estates worth more than a certain amount -- it's $3.5 million in 2009 -- are subject to estate taxes. But this exemption amount doesn't apply to married people: You can leave an unlimited amount to a spouse without generating a penny of estate tax. In certain states, this benefit is multiplied by special capital-gains-tax treatment for homes and other assets held by married couples as community property.
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A penalty still on the books
One marriage penalty that remains has to do with Social Security taxes and working spouses, particularly women.The Social Security Administration says 62% of the women over age 62 who receive benefits do so based on their husband's work records, rather than their own. A little more than half of these women didn't earn enough to qualify for payments based on their own work records. The rest opted to take half of their husbands' benefits because they were larger than the checks they could qualify for based on their own earnings.
Now, in one very real sense, these women are better off married because they benefit from their husbands' larger Social Security checks.
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No rush to the altarMarried couples in the U.S. are now in the minority, outnumbered by households of singles and unmarried couples. MSNBC’s Alison Stewart discusses the shift with author Stephanie Coontz.
This is no small potatoes. Social Security taxes now eat up 6.2% of every worker's paycheck, up to an annual maximum of $6,622 on earnings of $106,800 in 2009, while employers contribute an equal amount.
As more women work and earn better salaries, the proportion claiming benefits based on a spouse's record may decline somewhat. But because men still earn more on average than women, this phenomenon certainly won't disappear. Given the precarious state of Social Security and political realities, this is one marriage penalty that's likely to persist.
Updated June 2, 2009
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