Same-Sex Couples Can Now File Jointly in all 50 States: What that Means for Their Tax Credit Eligibility

By Kate Skochdopole

Today the Supreme Court legalized same-sex marriage across the country, making it possible for millions of LGBT couples to marry in their home states. During this time of celebration, most probably aren’t focusing on what this means for their federal tax returns. But once these couples take their vows, how they choose to file their taxes and what benefits they are eligible for may change dramatically.

Because married Americans who file jointly pay taxes on the couple’s combined taxable income, newly married same-sex couples should expect changes when it comes to their tax liability and eligibility for tax credits such as the Earned Income Tax Credit (EITC). That’s good news because the EITC, which already lifts 6.5 million Americans out of poverty each year, can now help more gay and lesbian workers support themselves and their families.

While some married couples who file jointly are eligible for a larger EITC benefit, some newly married same-sex couples could see a decrease in their tax credits because of “marriage penalties” in the tax code. A “marriage penalty” exists when the combined tax liability of a married couple filing a joint return is greater than the sum of the tax liabilities of each individual calculated as though they filed separately. Because the EITC begins to phase out as income rises, spouses filing jointly often receive a smaller credit than they would filing separately.

Lawmakers can take several steps to offset this problem and ensure more same-sex couples receive the tax credits they need. The Center for American Progress recently released a report outlining policy proposals that would expand the reach of the EITC to more LGBT couples. These recommendations include:

  • Lowering the age restriction to collect the EITC from the current age of 25 since more than 20 percent of same-sex couples under 25 are living in poverty.
  • Expanding the credit to childless workers to include the almost 80 percent of same-sex couples who do not have children.
  • Renewing expiring provisions of the EITC and Child Tax Credit (CTC) so more Americans can continue to collect these vital credits past 2017.

By guaranteeing these new couples have access to all the EITC and CTC have to offer, Congress can further help the LGBT community build financial security and support the well-being of their new families.