Two Ohio state representatives are seeking to eliminate the so-called “marriage penalty tax.” They have introduced a new bill for this purpose. The bill is led by Republican John Becker and Democrat David Leland. If passed, this bill would give married couples the option to file their state tax returns as separate.
Currently, Ohio law requires taxpayers to use the same tax status they use on their federal income tax returns. However, in Ohio, filing married often results in higher tax rates for couples. The Ohio Department of Taxation reports that if both spouses are working and earning minimum wage, the couple pays a $159 penalty each year. In Ohio, married couples pay more on their state income taxes than they have to when they file separately.
The bill’s sponsors say that the marriage penalty is the difference that taxpayers pay between their total income tax as married couples versus what they would pay if they were single. However, on federal returns, many couples benefit from their joint status, so filing separate on both income tax returns would often harm taxpayers more than filing jointly on both.
The bill seeks to rectify this tax controversy by allowing married couples to file married on their federal income tax return to get all of the advantages of that tax filing while also allowing them to file separately on their state income tax return to avoid the marriage penalty.
How the Bill, Once Passed, Helps Married Couples
The bill’s sponsors contend that people should not have to pay higher taxes simply because they get married. They believe that passing the bill would allow more than 2.5 million Ohio residents to pay lower taxes.
Only 15 other states have a similar marriage penalty tax, and Ohio is the only midwestern state with this penalty. While the bill would not force couples to file separately, it would give them this option so that they could choose the tax filing status that best fits their financial situation.
State representative Leland had introduced the same type of bill in 1983. It did not become law at the time but resulted in a compromise that minimized the impact on married couples. The next step of the current bill is to be assigned to a committee for further consideration.
If you would like to discuss your case with an experienced tax attorney, contact the offices of Robert J. Fedor, Esq., LLC. We can help with tax controversy issues and tax matters so that you can plan ahead for possible changes in the law. Call us at 800-579-0997.
