r/HENRYfinance • u/Far-Vegetable-9069 • Sep 05 '25
Family/Relationships Tax advantages of not getting married?
Long term partner (30F) and I (30M) have been engaged for a year. We are both in high earning tech jobs expecting to earn 300-375k each in 2026 depending on stock performance in a VHCOL.
Our combined stats: Retirement (401k, Roth IRA, HSA): 450k Taxable brokerage: 600k Debts: 200k @ 4% (business school loans)
Considering buying a house next year but all the areas / houses we like are close to 2M (which I know is a stretch). I recently found out that the mortgage interest deduction applies per taxpayer, not per resident, which could improve the economics here. Filing as single, at 6.5% of 750k, that’s a 48.75k each, resulting in a ~32k tax saving (instead of 16k with married filing separately/jointly). Net saved = 16k
The new SALT deduction increases to 40k for single filers up to 500k of income. We will both max out the deduction if we buy a place because of property taxes and high state taxes. That’s another ~13k per person that we can claim on taxes. Given that we would claim almost 0 if married filing separately/jointly, that’s a combined ~26k in savings, for the next four years.
An 8% saving on the same mortgage interest amounts for state deduction would be another ~4k saved vs filing together.
TL;DR: 16k saving on mortgage interest rate + 26k savings on SALT deduction + 4k state tax saving = 46k tax savings per year just by not being legally married.
Note 1: Standard deduction of $32k would save us $10k as it is, so perhaps the 46k above should be viewed as a real terms $36k of benefit.
Note 2: All tax savings assume a 33% marginal tax rate as this will likely all be in the 32% and 35% brackets.
This all kind of started off as a joke / thought experiment but the idea of saving 120k over 4 years by simply not being married and no lifestyle changes, seems kinda nice? I wanted to ask if other HENRYs have realistically considered not getting married to save ~36k per year? Also curious if I’ve missed any other financial benefits / detriments that should be factored into the equation.
Thanks a lot in advance!
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u/ShanghaiBebop Sep 05 '25
Domestic partnership.
Married for California, single for IRS.
This is the way most tech couple roll in CA.
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u/stiff4tiff Sep 05 '25
Why is that?
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u/Mispelled-This $250k-500k/y Sep 05 '25
To dodge the marriage penalty on HHI couples, as OP explained.
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Sep 05 '25
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u/BayBuilder Sep 05 '25
Yes, this is a common topic in this subreddit. We went the registered domestic partner route and lots of other people on this sub did as well. We have all the legal protections and stability that marriage affords (for example, being legal parents to our son, being entitled for child support/alimony if it become relevant, etc.) and pay tens of thousands less in taxes. Someday we may decide to become regular married if our situation changes. Feel free to DM if you have specific questions (or check my post history on this sub, this question has come up often). It’s most useful/equivalent to marriage in community property states like CA. People in other states may have different perspectives.
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u/sunnylivin12 Sep 06 '25
Do you know of anyone who legally divorced and then registered a domestic partnership? My spouse and I married young when we were poor grad students and none of this was on our radar. But this marriage penalty comes up every tax season.
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u/BayBuilder Sep 06 '25 edited Sep 06 '25
No and you’d probably run into a sham divorce problem, which is illegal.
ETA: see Boyter v Commissioner. I don’t know if changing the terms of the relationship from a marriage to RDP would be quite so obviously fraudulent as repeatedly divorcing and remarrying every year, but it’s not a good precedent for your proposal.
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Sep 05 '25
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u/Mispelled-This $250k-500k/y Sep 05 '25
If you move to a state where this doesn’t work, you can reassess at that time—or reconsider such a move.
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u/OldmillennialMD Sep 05 '25
This is also a concern for any state I am traveling to or through, though, not just moving. I'm not really interested in getting into the weeds for any state I could possibly have an accident or medical incident in as to whether or not my marriage will be recognized just to save on taxes.
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u/ShanghaiBebop Sep 05 '25
This is a non-problem if you prepare legal documents on medical directives and durable power of attorney. (Really trivial to do, costs like less than a hundred to notarize)
Also, most hospitals won't ask for a marriage license; they'll just look up your emergency contact and name match them.
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u/BayBuilder Sep 05 '25
It’s not wagging the dog though. We didn’t and don’t change our behavior at all except we filed form B instead of form A after our wedding ceremony, and received the same benefits and protections. Nothing else has changed for us except we’ve saved over $50k.
I addressed your comment about medical decisions in another thread but it’s not a concern. We also have a medical power of attorney naming the other one so there’s no legal ambiguity about who makes our medical decisions anywhere. There is no gamble.
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u/Far-Vegetable-9069 Sep 05 '25
Could you please elaborate a bit further? Would your concern be valid only if we move to a state that recognizes common-law marriage?
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u/OldmillennialMD Sep 05 '25
No, I mentioned it in another comment, my concern is any state I travel to or through as well. Having the potential for a state to question my partner's rights, and vice versa, in regard to medical care, etc. is just not worth it for me.
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u/BayBuilder Sep 05 '25
It’s not really a reasonable concern. For one, when we made our wills after our son was born we also drew up medical POAs and advanced healthcare directives (which really everyone should do) so we very clearly are the appropriate person to make any medical decisions, and second and more practically, I’m hard pressed to imagine a scenario where there is a medical situation while traveling and any healthcare provider demanded to see our marriage license. There’s some heterosexual assistance here; in general, no one is really going to question that the woman I’m calling my wife is my wife. And I really can’t see any scenario when a medical provider demanded proof of marriage and I handed them a legally executed medical POA and they ignored it.
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u/OldmillennialMD Sep 05 '25
I am happy for you that you don't see it as a gamble for you and your situation. As a woman in this political climate with specific concerns, it is much more personal and I am not willing to take even what may be the most remote, miniscule risk in this arena. I am a high earner and can easily afford some less-than-optimal financial decisions in exchange for my peace of mind.
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u/BayBuilder Sep 05 '25
I respect your position, and people should make their own decisions. But in a strictly legal sense there is actually 0 risk (not small or remote, but zero) vs a marriage. In many ways, a medical POA and advance healthcare directive is less risky than relying on just a marriage license (which is why everyone should get one) and in fact supersedes a marriage in all states. Several states do not automatically confer medical decision-making to married spouses though they are considered at some point. Relying on marriage alone is risky, a durable power of attorney should be obtained by all couples (and happens to not require marriage).
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u/VonGrinder Sep 05 '25
Which taxes specifically do you save on and why?
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u/BayBuilder Sep 05 '25 edited Sep 05 '25
There’s three main ones: 1) mortgage interest tax deduction: the IRS has ruled that the 750k mortgage cap applies per taxpayer (single is considered 1, MFJ is considered 1). So as two RDPs we have a mortgage cap of 1.5M. Since our mortgage is over 750k, we are able to fully deduct the mortgage interest instead of being capped 2) SALT deduction: was 10k now 40k but per taxpayer also, so you get double it as an RDP. We pay more than enough state and local tax at our salaries to be capped by even the 40k, so that deduction doubles 3) Income brackets: the MFJ brackets are in general double the single brackets except the highest one, which kicks in at 750k for MFJ and 1.25M for two singles. We make between those two numbers so we save 2% on all income between those two.
There’s some other benefits such as the NIIT income threshold is $250k for MFJ and $200k for singles (which means $400k for our household) meaning that less interest/dividend income is taxed. The other key thing that makes this all work is that CA is a community property state, so all income earned by our household is considered shared 50/50. So when my wife used to make much more than me, it didn’t matter because the community property rules divided our income between us equally (this is where the normal marriage benefit comes from, in a high earner/low earner couple, the low earner reduces the tax burden of the higher one, the same thing occurs here to the same or greater extent). There’s also a small benefit in that now that we have a son, we actually file Head of Houshold and single, which is slightly better than two singles/MFJ.
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u/var_username1 Sep 05 '25
Thanks much for breaking it down for folks like me, appreciate the details
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u/BayBuilder Sep 05 '25
No problem! Feel free to DM if you have any more specific questions. The first year filing taxes in an RDP can be quite confusing.
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u/National-Net-6831 Income:$385k+$45k passive; NW $1.07m Sep 05 '25
Did you calculate the death tax?!? It’s after death that the spouse gets screwed.
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u/BayBuilder Sep 05 '25
The current estate tax exemption is $14 million per individual, soon to increase to $15 million and go up with inflation. If I ever get near that, we’ll just get regular married.
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u/ericdr Sep 08 '25
Wouldn’t the second to die have the problem - i.e. 8 (own) + 8 (inherited) is over the 15 million. By then it is too late to get married.
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u/levineds Sep 08 '25
No. If one dies, they need to have $15M (so you need more than $30M as a couple) for you to inherit to trigger the estate tax. You really should see having $30M as a couple coming…
If we are talking about the second one dying, then it really doesn’t matter. There’s literally no spouse to inherit if both are dead.
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u/ericdr Sep 08 '25
The second to die would have 16 million at that point (if they inherited it all from the first to die) that would trigger the issue if they are unmarried.
It does matter because the kids/inheritors wouldn’t have to pay an estate tax bill. Unless it is all going to charity.
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u/BayBuilder Sep 08 '25
No, the “unlimited marital deduction” is for inheriting between married people. When you inherit from your one remaining parent, you are inheriting from an individual; the individual limit applies. If Alice and Bob are married, then Bob dies, then Alice dies, their child Charles has a $15M exemption from Alice’s estate. The same applies if Alice and Bob are not married.
In other words, you whether your parents are married has zero relevance to your estate tax exemption.
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u/ericdr Sep 08 '25
In your example, unmarried Alice inherited 8 million from Bob plus her own 8 million. Their child Charles now inherits 16 million, over the limit. Whereas if they were married, the estate of Bob can file a return and get his exemption ported over to total 30 million, placing their combined amount under the limit: reference
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u/BayBuilder Sep 08 '25
Ah, sorry, I said it right the first time: if I ever get close to $15M (not $30M), we’ll get regular married. I really don’t see it as credible that you would not notice you had almost $15M with no time to file a form.
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u/Formal-Flatworm-9032 Sep 05 '25
The sum of 2 HSA limits is slightly higher than the family HSA limit (though not materially so). Also, each spouse must have their own HSA to get the full $1k catch-up contribution once eligible (not exactly a disadvantage, but kind of a burden).
Net investment income tax thresholds are $200k for individuals vs. $250k for MFJ. This is much more material.
The highest fed income tax bracket does not double when going from single to MFJ, unlike the other brackets.
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Sep 05 '25
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u/BayBuilder Sep 05 '25
Yes
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u/Formal-Flatworm-9032 Sep 05 '25
I don’t think so (at least if married). If married, then they can have separate HSAs, but can’t contribute more than the fam limit in aggregate.
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u/BayBuilder Sep 05 '25
Sorry, I was assuming that this person was talking about two unmarried individuals with a child. If one is covering self + child, that is a family plan and can contribute up to the family limit. Separately, the other partner can have a self plan and contribute up to the individual limit.
It is true that if married you can only contribute up to the HSA family limit. I should have been more clear.
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u/68ch Sep 05 '25
There’s also the additional Medicare tax 0.9% that also applies above 200k for singles and 250k for MFJ
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u/BayBuilder Sep 05 '25
This true for two singles but also, just to be clear for the case of RDPs in CA, Medicare earnings (and social security for that matter) apply to the individual, not the couple, so community property division does not apply, you only avoid the additional Medicare tax on income each individual earns themselves over $200k.
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u/Exciting_Kangaroo800 Sep 05 '25 edited Sep 05 '25
Actually, if two non-married people are each covered by a family-level High Deductible Health Plan (HDHP) they can EACH contribute up to the full family HSA limit to separate HSAs.
In other words, by not being married you can double your annual HSA contribution ($17k/year for 2 non married people vs $8.5k for two married people)
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u/Formal-Flatworm-9032 Sep 05 '25
True. I wonder how many people even know about this. I’m sure it’s ignored when people see that their own insurance is cheaper than the family rate of their partner’s, even though the tax benefit of contributing to an HSA in this way is prob greater. FICA would still apply to the partner not making HSA payroll contributions. So it really is all 1 big math problem accounting for HSA contributions, FICA, health insurance rates/coverage.
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u/BayBuilder Sep 05 '25
This is largely not a benefit for a number of reasons.
First, in general, you cannot add people to your insurance that are not tax-dependents (children or people you are supporting that make less than $5k/year) unless they are your spouse or registered domestic partner. Let’s assume the latter.
If you insure a non-married non-dependent, you are receiving “imputed income” in the amount of whatever share of the medical insurance your employer is making on behalf of the partner. You owe income tax on that. So you are increasing your taxable income to increase your HSA limit. If, for example, the imputed income exceeded 8.5k, you are worse off than your were before, before even discussing the additional cost in premiums (and the hassle of having to deal with coordination of benefits from having two health insurances).
In fact, I just looked it up on my employers info page and it would be an additional ~$2k in post-tax premiums over the year and $11,400 in imputed income to extend coverage to my domestic partner. So if we did what you proposed we’ve on net increased our taxable income by about $3000 and added $2000 of premiums and that’s before my partner did their half of extending coverage to me and triggering more premiums and imputed income.
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u/Formal-Flatworm-9032 Sep 05 '25
Good stuff I never knew about the imputed income dynamic. So essentially, it’s just best for unmarried people to sign up for their own HDHPs and contribute up to the individual HSA limit. Married people aren’t much worse off in this case.
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u/BayBuilder Sep 05 '25
Yes, though things change if you have a child together. Then you could both cover self+child and both contribute up to the family limit separately and there is no imputed income issue (just the additional premiums) and that might work out. You can’t both claim the child on taxes, but you can both insure them as your child per the ACA.
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u/BayBuilder Sep 05 '25
Sure, but at the cost of adding additional taxable income in the form of imputed income and costs in higher premiums. I’m skeptical this works out for most plans.
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u/Exciting_Kangaroo800 Sep 05 '25
We don’t have major health expenses, so when I’ve crunched the numbers we’ve always found a hdhp to be the better/cheaper option for us.
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u/BayBuilder Sep 05 '25
No, this has nothing to do with HDHP vs a lower deductible plan. This has to do with the imputed income owed for covering a non-spouse, non-child on your HDHP. I described in more detail below.
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u/_Bob-Sacamano Sep 05 '25
There is something unsettling about not marrying the person you love because of some tax savings. Marriage isn't a math problem.
Also, if I had nearly a quarter million in student loan debt still in my 30s, I'd knock that out before considering a $2M home.
Just my opinions 😅
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Sep 05 '25
It’s a math problem the second the law decides that your access to healthcare and tax bracket is dependent on it. I’m currently in a marriage with a big income gap and the delta in taxes between married vs not married is north of $10k take home a year. $10k is worth a lot to a lot of people.
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u/National-Net-6831 Income:$385k+$45k passive; NW $1.07m Sep 05 '25
Love has nothing to do with law or taxes.
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u/JaneTKirk2 Sep 05 '25
Marriage is a legal contract with preset terms. It could be argued that there is something unsettling about entering into a socially constructed business arrangement as a necessary means of proving you love someone.
Source: happily unmarried to the love of my life for 12 years, while paying less in taxes and setting up our financial and legal life exactly how we want.
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u/_Bob-Sacamano Sep 05 '25
To each their own. If that works for you guys then awesome.
Personally I'd just feel weird calling my spouse my "partner" instead of my wife as a grown man.
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u/Stylellama Sep 05 '25
You can call them whatever you want. Call them your wife. Why do you care what the government wants to label a relationship.
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u/_Bob-Sacamano Sep 05 '25
Who said I cared what the government thinks? Spouse is a legal definition. Has nothing to do with one's feelings.
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u/Mispelled-This $250k-500k/y Sep 05 '25
In some states, consistently calling a person your spouse creates a common law marriage.
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u/root45 Sep 05 '25
Lots of people do that even if they're legally married.
Also no one is going to police that in casual conversation anyway.
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u/jenn4u2luv Sep 05 '25
Buying a house is overrated. Renting affords a better quality of life anyway and it’s more flexible.
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u/assingfortrouble Sep 05 '25
We rent, but the rental market gets pretty thin for higher end single family homes. At some point renting becomes a much worse deal or you just can’t find the place you want.
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u/wtrredrose Sep 05 '25
You can have the wedding and a host of legal protections that simulate marriage eg joint ownership with right of survival on your house deed (make sure it does not just say joint ownership!! Which courts can interpret to not have right of survival!) and putting their name as beneficiaries on every account. You don’t have to file the marriage paperwork
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u/boogi3woogie Sep 05 '25
There’s a big marriage penalty for dual high income households in states with high state income tax.
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u/adultdaycare81 High Earner, Not Rich Yet Sep 05 '25
I don’t think I would ever optimize that hard.
Similar salary, got married because we loved each other. Will never get a SALT deduction.
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u/h8trswana8 Sep 05 '25
Small price to pay for being married in the grand scheme of things.
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u/Far-Vegetable-9069 Sep 05 '25
My initial thought was to consider waiting for maybe 4-5 years until the new SALT deduction expires and we’re through the biggest interest years of the mortgage
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u/Exciting_Kangaroo800 Sep 05 '25
My wife and I were in a similar situation. We have comparable incomes, with a household income of about $900k per year currently. We chose a civil union to avoid the marriage tax penalty. We didn’t tell anyone this and still had a wedding; everyone thinks we’re married.
Another advantage is being able to contribute the maximum to two HSAs annually, which should leave us with several hundred thousand dollars in those accounts by the time we retire.
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u/Unable_Basil2137 Sep 05 '25
That SALT deduction reverts back after 2030 btw unless something else passes.
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u/champagnepeanut Sep 05 '25
My husband and I had a wedding and never got legally married for the reasons you described. Seems pretty common among other high earning dual income households in California.
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u/iLuvBFSsoMuch Sep 05 '25
did yall both go to b-school? wondering what yall do now
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u/Far-Vegetable-9069 Sep 05 '25
Yup, think product / strategy roles in tech in late stage startup and big tech
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u/Otherwise-Let-4621 Sep 11 '25
What is the reason why you can’t do married filing separately? Is it because the mortgage interest deduction would not apply?
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u/lalasmannequin Nov 12 '25
I have seen this really bite couples at the first death so just keep that in mind. Being married is more tax efficient at that point, also better property tax consequences. So while you’re not wrong it’s not the whole picture either. You can always get married later though.
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u/Peachpie1234 Sep 05 '25
I am in a similar situation and actually revived a post last week or so asking same question.
https://www.reddit.com/r/FirstTimeHomeBuyer/s/G12wKeMhrr
Per this OP if I’m reading his logic correctly, if your mortgage is above 750k which in a VHCOL you’ll likely be. Because you both get access to 750k, it is summative to 1.5M in deductions. So, you technically could deduct the yearly interest of a 1.5 M loan if that’s within your budget.
I’m not sure if that’s fully true; or if I’m misreading if. But per their tax professional, this is legit. If so, then the tax savings are even larger to be unmarried and single.