How has the Working Families Tax Relief Act of 2004 extended tax relief to those taxpayers affected by the marriage penalty?
The marriage penalty refers to a peculiarity that requires two-income married couples each year to pay more in federal income taxes together than they would owe if each spouse were single. Previously, the tax law provided a degree of relief from the marriage penalty in two ways. First, the basic standard deduction for a married couple filing a joint return was increased so that it equaled twice the basic standard deduction for an unmarried individual filing a single return. Second, it increased the size of the 15-percent rate bracket for married couples filing joint returns. However, these provisions were due to expire on December 31, 2004. The Working Families Tax Relief Act extends both these provisions through 2010. Thus, for 2005 through 2010, the basic standard deduction for married taxpayers filing jointly will be twice the basic standard deduction of single taxpayers and the basic standard deduction for married taxpayers filing separately will be equal to the basic standard deduction of single taxpayers. Likewise, for 2005 through 2010, the endpoint of the 15% tax bracket for joint returns will be twice the endpoint of the 15% tax bracket for single returns.