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Nontraditional, nonmarket activities, including decisions on when to marry, are affected by added taxes on income associated with getting married. An analysis of household data from the Panel Study on Income Dynamics shows that marriage taxes increased the probability of delaying marriages until the next year. The effects, however, are small.

It is now widely documented that marital decisions can have a significant impact on individuals' income taxes, via what has come to be called the marriage tax or marriage subsidy. [...], This paper discusses new empirical evidence on the role of income tax incentives in marital decisions. Time-series evidence suggests that taxes have a small but statistically significant effect on the aggregate marriage rate, however, this evidence is sensitive to the time period and the measure of marriage. Additional evidence, based on household longitudinal data, indicates that the probability of marriage falls and that of divorce rises with an increase in the so-called marriage tax, and that the timing of marriage (though not of divorce) is also affected by taxes. In short there is strong evidence that taxes affect some marital decisions.

Changes in marital status can affect obligations and entitlements in terms of transfer payments and taxation. Married couples may pay more tax than two single people with the same earnings, which represents a marriage penalty. They may alternatively pay less tax when married if one spouse has no earnings, and this is a marriage subsidiy. The tax penalty arose in 1969 with the Tax Reform Act. Meanwhile, women may lose entitlement to some trasnfer payments if they marry. The tradeoffs involved in changing the system should be made clear.