Here are some examples of the marriage penalty that came about in 1971.
Us tax pros generally say the marriage penalty doesn’t apply at the lower ends of the tax brackets. That’s generally true now, and it was generally true in 1971. A typical middle class couple would not face the marriage penalty.
In 1971, John and Jane are unmarried. John has taxable income of $8,000. Jane has taxable income of $1,000. John’s tax liability will be $1,590. Jane’s will be $145. Combined, that equals $1,735.
Now let’s say John and Jane are married. The tax on a joint tax return showing $9,000 of taxable income is $1,600. There is no marriage penalty at their income level.
($1 in 1971 is equal to $5.67 today. So $9,000 of income is approximately $51,000 today.)
Then as now, the marriage penalty applied mainly to cases where a couple both had taxable income.
In 1971, John and Jane have taxable income of $8,000 each (equal to about $45,000 each today) for total taxable income of $16,000 on their joint tax return. The tax on $16,000 for a married couple is $3,260.
If they were unmarried and filing as two single people, they would owe $1,590 of taxes each, or $3,180 of total taxes. That’s a marriage penalty of $80, or about $450 in today’s dollars.
Through the years, the marriage penalty would get worse, as we’ll explore in Part 14.