Brief The Financial Consequences of Marriage for Cohabiting Couples with Children
Elaine Maag, Gregory Acs
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Tax and transfer programs can create significant bonuses and penalties for low- and moderate-income cohabiters with children. We find that federal tax laws can create marriage penalties that reach almost 10 percent of earnings for our hypothetical couples earning $40,000 or $50,000 a year. In contrast, a prototypical couple earning $20,000 a year could receive a marriage bonus in excess of 10 percent of earnings. Because the transfer programs we consider largely treat cohabiting parents the same as married couples, they create neither significant marriage penalties nor bonuses; however, there may be instances in which couples are misclassified and receive transfer benefits as separate households when cohabiting which could lead to marriage penalties from those programs.
Research Areas Wealth and financial well-being Families Social safety net Taxes and budgets Children and youth
Tags Families with low incomes Temporary Assistance for Needy Families (TANF) Welfare and safety net programs Economic well-being Family and household data Employment and income data Wages and nonwage compensation Workers in low-wage jobs Refundable tax credits Supplemental Nutrition Assistance Program (SNAP) Earned income tax credit Supplemental nutrition - Women, Infants, and Children (WIC) Individual taxes Kids in context Hunger and food assistance
Policy Centers Income and Benefits Policy Center Urban-Brookings Tax Policy Center