Final answer:
The "marriage penalty" occurs when both spouses have substantial income, potentially pushing them into a higher tax bracket when filing jointly. It is a result of the U.S. progressive tax system and primarily affects dual-income households where both spouses are high earners.
Step-by-step explanation:
Understanding the Marriage Penalty
The term "marriage penalty" refers to a situation in U.S. tax law where married couples end up paying more income tax than they would if they were single and filing individually. It often occurs when both spouses have substantial income. This situation arises from the way tax brackets are structured, with the combined incomes potentially pushing the couple into a higher tax bracket when filing jointly, compared to filing individually as single taxpayers. This penalty does not usually apply when one spouse makes significantly more than the other or if they choose to file married filing separately. Furthermore, individuals cannot file as single if they are married, and spouses cannot file separately as head of household under normal circumstances. Both of these filing statuses are reserved for individuals who are not married or are considered unmarried for tax purposes.
Progressive tax brackets by income mean that as a taxpayer's income increases, the rate of taxation also increases. The United States uses these progressive tax rates, which vary based on income, filing status, and other factors such as family size. Over time, as more dual-income households emerged with both spouses earning high wages, the likelihood of encountering the marriage penalty increased.