Voiceover: In Couple A, right over here, I have 2 individuals

who make $100,000 each in taxable income. The first thing I want to think about is how much they would pay if they were taxed as individuals. Let’s look at the individual

tax brackets here, and get our calculator to

figure out what that would be. For each of them, the first

8,925 of taxable income is going to be taxed at 10%, and if we round, that’s $893. $893. Then the next increment,

from 8,925 to 36,250, is going to be taxed at 15%. I pre-calculated what that is. That’s $4,099, rounding a bit. 4,099. Then the increment up to $87,850 is going to be taxed at 25%, and that gets us $12,900. Then the increment above 87,850, this is essentially the

bracket they fall into, because they make less than $183,250, that’s going to be taxed at 28%. It’s going to be + .28 x the increment above 87,850, so we have

100,000 of taxable income. Do I have the right number of zeros? Let me see; 1 … That’s 100; that’s 10,000 right now. That is 100,000; did I do that? Yeah, 100,000 – 87,850. 87,850, gets us to $21,294. This is what they would

each pay as individuals, but we’re going to look

at them as a couple, so as a couple, both of them combined, if we multiply by 2, both

of them are combined, if they were taxed as individuals, or if they had never got married, and, I don’t know, they

just lived together, what their combined taxes

would be, is $42,588. So $42,588, combined,

if they’re not married. Now let’s think about

how much they would pay as a married couple,

where they have $200,000 of combined taxable income. Now we would look at the filing

jointly married brackets, and even if you’re married

and you file as individuals, your brackets are essentially going to be half of these brackets right over here, so it comes out economically equivalent, or it comes out economically equivalent if you make the same incomes. We’re going to talk about

that a little bit more. Let’s look at this married, filing jointly, scenario for Couple A. Let’s get the calculator back out. Now we’ll look at the married brackets. So the first 17,850 is

going to be taxed at 10%. You might already notice that, at least these first few brackets are exactly twice the numbers as these brackets right over here, and the general idea is

you now have 2 people, so they can essentially

have twice the income before they fall into another bracket. But that keeps on going until you get to this

point right over here, and that’s actually the

whole point of this video; to explore whether this results in married couples paying

larger or smaller taxes. Let’s think about how

much this couple’s paying. The first 17,850, 10%; that’s $1,785. Then the increment up to 72,500 is going to be taxed at 15%. Pre-calculated, that is

$8,188, right over there. Then the increment up to 146,400 is going to be taxed at 25%. Pre-calculated that as $18,475. Oh, I don’t want to have that. Let me delete one of these plus signs. Then, finally, finally, we fall into this bracket right over here. It’s going to be taxed at 20%. The increment above 146,400, the increment above that is going to be taxed at 28%, so it’s 28% x 200,000. 200, 1, 2, 3, – 146,400, and we get combined taxes of 43,456. 43,456. Now, what immediately jumps out at you? Well, first, these are

not the same number. In particular, when they’re married, they pay higher taxes, so this couple, that they

have fairly high income, and they both make the same amount, they would have actually paid fewer taxes if they never got married, and if they just filed as individuals. Now, when they’re married, they’re paying more taxes, and the main idea is, they

fall into this bracket, and this bracket came faster than twice the rate at

which this bracket came, when they were just filing individually, and so they fell into

the 28% bracket faster, so they had to pay 28% on

more of their combined income; they ended up having a bigger tax bill. When people talk about

the marriage penalty, this is what they’re talking about. These people are essentially paying a tax because they got married. This is the marriage penalty. Now, let’s explore if there’s

always a marriage penalty. If there’s always a case, that if by getting married, you’re going to pay more by income taxes. Here we have Couple B, and

they have less equal income. They still have a combined

income of $200,000, so if you look at the

married filing jointly, they’re still going to pay 43,456 when they file jointly, but let’s see how much they would pay if they were individuals; if they never got married, and we combine how much

they would have had to pay. Let’s get the calculator back out. First we’re going to think about the first member of the couple, who makes 180,000 in taxable income. They’re going to pay 10% on the first 8,925, so that’s 893, and then we can add that to 4,099; we’ve done this already. 4,099. To that we could add 12,900. 12,900. And then, to that, we’re going to add 28% of

the increment above … so he makes or she makes 180,000. 180, 1, 2, 3, – 87,850. 87,850. So that’s the increment above 87,850, and we get this spouse, this member of the couple, is going to pay 43,694. Now, to that we’re going to have to add the amount that the other

member that might pay. He is going to pay 893 on the first 8,925, so it’s going to be 893 plus the 15% of the increment above 8,925. So, + .15 x 20,000; 1, 2, 3, – 8,925, gets us to, this member of the couple is going to pay, let’s

see, 2,554 in taxes. If we add it to the other

member of the couple, so we add that answer + 43,694, that’s what the larger earner is going to have to pay in taxes, we get 46,248; we’ll just round to that. 46,248. So here, all of a

sudden, we see a scenario where the opposite thing; the higher value is if

they don’t get married. In this situation, they

actually got a marriage benefit. They got a marriage benefit. Now, why did this happen? The thing that might

have jumped out to you, both of these people had high incomes, and they had very equal incomes, while both of these people, their combined income was the same, but there was less equal, and so essentially what happened here, this person filed by themselves; on the individual tax bracket, they go up the brackets very,

very, very, very quickly, and then this person, well, they’re not paying much in taxes, but this person is paying the bulk of it. By becoming a couple, by getting married, as a combined entity, and pretty much this is

the main beneficiary, that 180,000 in taxable income, that’s most of the 200,000, they’re able to move up the

tax brackets a lot slower, so they’re getting taxed at 28% on a much smaller

fraction of their income. They’re getting taxed at 25% on a much smaller

fraction of their income. They’re getting taxed at 10% on a larger fraction of the income than when, especially this

individual right over here, filed as an individual. In general, if you have a couple with very high taxable income, and they both make roughly equal, they both have very high

taxable incomes as individuals, they are likely to see a marriage penalty, like we saw in scenario 1. If you have a couple where their salaries are very unequal, even if

their combined salaries are quite high, you actually

might get a marriage benefit, because they move through

the tax brackets faster. Now let’s think about Couple C, and I’ll let you think

about it a little bit. You have equal taxable incomes here, so it’s like Couple A, but their total taxable income isn’t high. In fact, if you look at

the married filing jointly, they fall under this tax

bracket right over here. And, notice, up to this point, all the tax brackets are exactly double the individual tax bracket, so it goes exactly twice as slow. I guess you could think about it as a fraction of income, when you have 2 people making the same, you’re having the same fraction taxed at 20% or at 15% or at 25%. I encourage you to do the math here. It’s just good practice, but what you’re going to see, is these people are going

to pay the same taxes. This is going to be the same whether or not they are

married or not married, because they’re not making

enough combined income to get the penalty, where the brackets start accelerating a little bit faster. Anyway, hopefully that

clarifies things a little bit.

## 34 comments

## Faustodc

Solution?

Don't get married.

## Adonis of Jesus

dont get married

ever

## tubercat

marriage is a contract, and has nothing to do with love…

## Worthless Winner

Apparently it's a bad contract.

## Cooper Weyen

Interesting OuO, Math is amazing! Taxes are a pain! π

## LEO

thanks khan now instead of giving my girlfriend a prenuptual agreement im going to just show her this!

## JonFFavale

Why do I feel like the percentages are wrong? I thought the percentage decreases and your income increases.

## SaraphL

Is is bad to actually not to plan to marry at all in my life?

## King Cadmos

No.

## hazmathews

Great video, just a shame the comments section is full of shit at the moment.

## Querty Beighteen

So, get married if you're going to have a stay-at-home spouse. Which is common if you have children.

## aaronlosing

Nope it's not, I myself am not getting married, ever. The idea of legally tying myself someone doesn't make sense.

## aaronlosing

As you make more money you pay more taxes or at least you should. Am I misunderstanding your question?

## Intense Apathy

Thank you Sal, important life advice right here!

## WoundDragon

Well there is a problem here and it's avoidable… Step one don't get married step enjoy life

## Faxtro1

No, the more you make, the higher percentage the gov't takes.

A person making 100k would pay more in taxes than 10 people each making 10k combined.

## Kleineganz

He doesn't discuss married, filing separately – there's a whole different tax scenario there and is actually even worse than married, filing jointly.

## Kleineganz

Married, filing separately accelerates you through the tax brackets faster than filing as a single person does. The first two brackets are the same (10%, 15%), but when people are Married, Filing Separately, if they earn over $71,350 they jump into the 25% bracket. If those same people filed as single (not married at all), they would have to earn $85,650 before they jump into the 25% bracket. This is even worse than Married, filing jointly. Make sense?

## Kleineganz

You don't seem to understand, if you're married you can either file "married, filing jointly" or "married, filing separately" … the tax brackets for "married, filing separately" hit couples harder and faster than "married filing jointly," in most cases.

## Kleineganz

Ok the problem is if you earn enough to hit the marriage penalty, filing separately will actually lead to a larger penalty. If you don't earn enough to hit the penalty, then why bother? Your solution of "if it effects you, just file separately" is no solution because doing so will cause you to pay even *more* taxes, not less.

## furqi826

Thumbs up if you came here because the weirdest educational video title π

## Kleineganz

The video is only comparing Single and Married, Filing Jointly. Married, Filing Separately is yet an entirely different set of tax brackets. Once you're married, you can't file as "Single," you have to file as "Married, Filing Separately" which causes you to pay *more* taxes. For some reason I think you seem to think that the two ways of filing that Sal mentions in this video are the only two ways, when there is also a 3rd way to file. Look it up! I'm done trying to explain this.

## srkb001

why don't we start counting the blessings of sight, hearing, health etc which enable us to go to work, then pay tax by obeying God. Sounds fair to me.

## Kleineganz

Disagree all you want, it's a *fact* if you would just bother to take the time to look it up. If I could post an excel table here I could prove it to you.

## soul Wanderer

No

## Paul Noel

You screwed up! You missed factors like the deductions against income ahead of determining taxable income. The actual problem occurs at the difference of Single head of household deductions vs single vs married and things like this. The tax penalty is much bigger.

## Bu Yao

Did ANYBODY watch the video?

## VMichial

rich+rich = file separately

rich+poor = file jointly

poor+poor = who cares do what you want

## bbababonbon..bonfire!

5:00 … the truth comes out! lol

## Cythil

And now you know why rich people get trophy wives >_>

## eidius1989

its funny its only when the couple are paid equally but if one spouse makes less than the other then… its better or the same.

## kshuf

9:08 I think you meant to say that the married filing jointly couples move through the brackets slower, not faster.

## Thinking Beyond

Could you do one for a couple making 49056 filling jointly. I tried the calculations but havent gotten the right results.

## Millard

Dont get it.,,,they are earning 200 k but pay 43 k,,,he other couple earn 100 k and pay 42 klllso the other couple have more money and pay less tax!!,!