…Ready for It? A New Tax Era for Kelce and Swift
Weddings are full of joy and sunshine, but with them comes a new tax reality that couples can’t just shake off.
Taylor Swift and Travis Kelce happily announced their engagement this week. I do not know either of them personally, and as a result I can’t give them any specific advice about their taxes, marriage, or their professional pursuits. However, I can expound generally on how their taxes may change as they transition from independent taxpayers to a married couple. If you are also considering a walk down the aisle, read on to learn how getting hitched can result in big changes in your tax return.
First, what doesn’t change:
Both Swift and Kelce will pay the same amount in FICA taxes and/or self-employment tax, regardless of their filing status in 2025.
The definition of taxable income doesn’t change when you go from being single to married. Wages, interest, dividends, capital gain, rental and royalty income, and income from endorsements must be reported on the tax return.
They will also both have to file taxes in every state in which they have sourced income that is over the threshold for needing to file (most likely, one football game or concert will do it).
The same tax brackets (for federal, and also the case for a majority of states) apply, but the income range in which they take effect generally increases. Federally, most of the tax bracket ranges double, but there are some exceptions, which create a marriage penalty.
Cruel Summer, Crueler Marriage Penalties:
Ah, those marriage penalties. Let’s start with the federal tax brackets. If you compare the tax bracket ranges for Single and Married Filing Jointly (MFJ), you’ll see that the high and low numbers in each bracket are about double the amount for married couples, compared to single filers. However, while the top bracket of 37% begins at $609,351 for single filers, it starts at $731,201 for MFJ filers. For those keeping score at home, that’s a difference of potentially almost half a million dollars in taxable income that is taxed at 37%, rather than 35%. That could translate to a penalty of almost $10,000. Moreover, tax bracket inequity is rampant at the state level.
There are also some more esoteric penalties at the state level. California imposes a mental health service tax of 1% on income exceeding $1 million, for both single and married filers. In essence, by getting married, the amount of exempt income is cut in half from $2 million to $1 million, and the 1% tax on that $1 million works out to an extra $10,000 tax liability.
To add insult to injury, currently Swift and Kelce can each deduct $3,000 of capital losses of ordinary income. Now that they are getting married, this should increase to $6,000… right?? Wrong! If they were both working with the same advisor that told them to dump money in Silicon Valley Bank, that will sting.
I imagine neither Swift nor Kelce will be going hungry anytime soon as a result of these marriage penalties. However, it isn’t really fair, and even wealthy celebrities deserve a fair tax code.
Actually, the marriage penalties are longer than Andy Reid’s playbook:
The tax code treats married couples unfairly in other ways through the phasing out of certain deductions and tax credits. However, the phase-outs are generally complete at incomes well below private-jet status, so Swift and Kelce can breathe a huge sigh of relief here. I won’t expound in detail about all of these, but here is a short list of phase-outs that can adversely impact married couples.
1️⃣ - The new SALT cap deduction, implemented in the One Big Beautiful Bill Act (OBBBA): Both married couples and single individuals lose 30% of their maximum state and local tax deduction at incomes between $500k and $600k. As a result, the maximum deduction could go down from $40k for each of two single filers to $10k for a married couple with income exceeding $600k.
2️⃣ - The threshold for taxation of Social Security income: The exemption of tax-free Social Security income for married couples is much less than twice the amount for single people (it also has not increased with inflation for several decades, but that is a rant for another day).
3️⃣ - The phase-out income range for the adoption credit is the same for single filers and married couples.
4️⃣ - The child and dependent care credit phases down to 20% of eligible expenses over the same income ranges for single and married filers.
5️⃣ - The exemption for the Alternative Minimum Tax (AMT) for a married couple is less than the combined exemption for two single people. Many of us have forgotten about the AMT since the Tax Cuts and Jobs Act (TCJA) was passed in 2017, but the higher SALT cap deduction likely means more taxpayers will be vulnerable to it for the next few years.
It’s not all Bad Blood in the Tax Code for married couples:
At this point, you might be wondering why our tax system doesn’t do more to encourage couples to tie the knot. After all, federal lawmakers have promoted the institution of marriage since time immemorial, and the Internal Revenue Code (IRC) has historically been utilized to incentivize behaviors that the government promotes.
The truth is that couples may well be able to lower their tax liability by getting married. Most obviously, if one spouse is the breadwinner, and the other spouse does not work, the same income is taxed in wider, more generous tax brackets for couples who file jointly.
The federal government doesn’t have a specific “marriage credit,” but some states (Ohio, Minnesota, and Wisconsin, and possibly others) do.
At the federal level, there are some tax deductions and credits that do phase out over income ranges that are double the range for single folks. These include the Child Tax Credit, the Qualified Business Income (QBI) limitation for service businesses, the education tax credits, and the soon-to-expire electric vehicle credits. It’s possible that if your income is too high and you are otherwise eligible for these tax breaks, and you marry a lower-earning spouse, you may then qualify for them (however, this cuts both ways… if you marry a higher earning spouse, you may lose the tax break).
I mostly focus on income tax considerations, but there is also a significant marriage benefit for wealthy individuals looking to reduce their estate tax. There is unlimited gifting allowed between spouses during their lifetimes, and it is also possible to transfer one spouse’s unused estate tax exemption to the other.
So, what’s the End Game?
As a tax advisor, I imagine how I might advise Swift and Kelce (author’s note - they are not my clients, and I can’t offer professional advice to them. But Taylor and Travis, if you’re reading this, I do have availability!).
Can they deduct the cost of their wedding? Unfortunately, not so much. Wedding costs themselves are not deductible as an above-the-line deduction on Schedule 1, nor are they deductible as an Itemized Deduction. If you try to claim your wedding as a business expense, don’t expect it to hold up in an audit or in a Tax Court.
Can they just file separately? Yes, but this is unhelpful most of the time, because so many deductions and tax credits are disallowed filing separately. However, the rules vary with each potential tax break, so consult a tax professional if you think you might lower your tax liability by filing separately (this is most likely to be true if you live in a community property state). As I mentioned earlier, these considerations are likely moot for both Swift and Kelce, since I suspect they make too much money to qualify for these.
One observation I would make is that filing status is determined based on the the last day of the tax year. So, if Swift and Kelce are calendar-year taxpayers, if they would save money by filing single, they may be able to squeeze some savings by getting married at the beginning of the year, rather than the end.
However, before I conclude this post, it’s worth taking a return flight to reality. Celebrities with ten-figure net worths have bigger financial fish to fry. Their tax situations are light years away from yours (and mine); this post is for you, not them. I wish Swift and Kelce the best as they plan their walk down the aisle. If you are thinking of doing the same, planning ahead with your partner is a worthwhile endeavor. Even if it doesn’t change your wedding plans, this will make it easier to anticipate your tax liability in future years.