Feb 5, 2025
A change made to the tax system back in 1948 to give American households a tax advantage has been linked to the country’s ongoing gender pay gap in 2025.
Joint tax filing, which was introduced by Congress in the Revenue Act of 1948, allowed married couples to combine their income and deductions and base their tax rate on that sum. Almost all married couples now take advantage of this option.
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But a 2019 study from the National Bureau of Economic Research found this rule — which primarily benefited married men at a time when they were typically the only ones working, allowing them to offset their earnings and reduce their household’s tax burden — has worked to disincentivize women from earning more.
Here’s why researchers argue the government must act if anything is to change — plus what other breaks families can count on in the coming year.
The problem with joint filing
Because men typically make more money than women, combining their incomes to file taxes jointly tends to result in men seeing their tax rate go down, while their wives see their rate go up.
Here’s how that might look. Olivia and Noah, a recently married couple, are at different points in their career. Before they were wed, Noah paid a tax rate of 24% on the upper portion of his $150,000 a year salary, while Olivia’s $45,000 salary was only (federally) taxed at up to 12%.
Now that they’ve made it official, the top tax rate on their combined $195,000 household income is 22%. Which means Noah gets a break, but Olivia’s tax liability goes up significantly.
This has resulted in discouraging married women from pursuing higher-paying positions, and has even caused some to drop out of the workforce completely to reduce the couple’s tax burden, argue the NBER researchers.
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What’s the solve?
While many married women are being taxed at a higher rate than their husbands, filing taxes separately doesn’t necessarily solve the issue. In fact, the majority of American households are better off filing jointly, since it unlocks a number of advantageous tax credits and deductions.
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However, there are a few exceptions where married couples should opt for the “Married, filing separately” option. For example, it could make sense to file separately if you’re paying off income-driven student loans or trying to get bigger tax breaks for medical expenses or charitable donations.
But for most households, the NBER researchers argue that the solution is in the hands of the federal government.
If tax rates were not tied to marital status, more women would work, men could retire earlier, and Americans would have more savings, the study found. The researchers proposed getting rid of the marriage-related provisions in favor of lowering income taxation, arguing it would result in “large welfare gains for the vast majority of the population and the few losing would experience small welfare losses.”
They expect it could not only draw more married women’s participation in the workforce, but also disincentivize married over 60 from working longer and increase savings.
New tax rules for this year
However, that tax change is unlikely to happen anytime soon, which means filing jointly is still their best bet. That being said, the IRS has introduced new tax adjustments for 2025, which may slightly change how your filing will go this season.
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One tax change affecting married couples and single people alike is the change to Alternative Minimum Tax, which makes sure high-earners aren’t using tax loopholes to avoid taxes entirely.
The AMT allows an exemption for couples filing jointly of $137,000 (and $88,100 for single filers). Any households earning more than that are subject to the AMT, at two rates: 26% and 28%, explains the Tax Foundation. Those income thresholds are up slightly from last year.
There are also some tax changes for families coming for the 2025 tax year. Low- to moderate-income families with three or more children will be able to claim up to $8,046 from the Earned Income Tax Credit, while the Child Tax Credit remains at $2,000 per child for families making up to $200,000.
Additionally, adoptive parents can now claim up to $17,280 in tax credits, up a few hundred dollars from last year.
As always, if you’re uncertain about whether filing separately or jointly will be better for your household, it’s never a bad idea to consult with a tax professional. Someone who understands the complex U.S. tax system will be able to help you sort out the best solution for your family.
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William Koblensky Varela is a Staff Reporter at Wise who has worked as a journalist for seven years covering finance, local news, politics, legal issues and the environment.
