I make 150k, wife makes 61k. Better off filing separately vs. jointly?

When I look at this tax bracket, it seems that if we filed separately, my wife would be in the 22% bracket and I would be in the 24% bracket… However, if we filed together, it looks like we would fall in the 24% bracket for all of our taxes.

https://www.irs.gov/newsroom/irs-provides-tax-inflation-adjustments-for-tax-year-2023

For this reason, does it make more sense for us to file separately?

I've read most of the posts here (which all suggest to file jointly); however, I feel as if my situation is unique because if we file separately my wife will be in a lower tax bracket (and filing together does not lower my tax bracket).

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Comments

dgtdc

Note: we have no kids nor significant loans nor medical pay

MatthewD

Hello dgtdc,

That is a good question. Let's do a quick analysis, since it is generally always best to file as Married Filing Joint. Let's see if that is true.

Here are the 2023 IRS Tax Brackets:

"Marginal Rates: For tax year 2023, the top tax rate remains 37% for individual single taxpayers with incomes greater than $578,125 ($693,750 for married couples filing jointly).

The other rates are:

35% for incomes over $231,250 ($462,500 for married couples filing jointly);
32% for incomes over $182,100 ($364,200 for married couples filing jointly);
24% for incomes over $95,375 ($190,750 for married couples filing jointly);
22% for incomes over $44,725 ($89,450 for married couples filing jointly);
12% for incomes over $11,000 ($22,000 for married couples filing jointly).

The lowest rate is 10% for incomes of single individuals with incomes of $11,000 or less ($22,000 for married couples filing jointly)."

I put together a little comparison together just so you can see how this works. Keep in mind that this just analyzing your wages and the Standard Deduction was applied. Notice the difference in the MFJ tax ($30,941) and the MFS ($31,746.50). A difference of $815.50 more tax paid for filing Married Filing Separately. So, our simple analysis proves that MFJ is generally better than MFS.

Because of the large deduction for MFJ, none of that income is taxed at the 24% rate. Something like this can really help you make the right decision.

dgtdc

Extremely helpful! I will be using TaxFreeUSA to file jointly (MFJ)… So grateful for the reply :)