The Earned Income Tax Credit program, which provides a refundable tax credit for low-income households, penalizes marriage, according to a report from the American Enterprise Institute (AEI).
In order to receive the refundable tax credit, low-income workers must file an annual income tax return and their income must be below a certain threshold. In 2013, for example, families with children received an average benefit of $3,074.
"Because of its structure, some low-income couples who share a child can receive a much larger benefit if they are unmarried than if they were to marry," explains the report.
"On average, for married couples with one child who faced a penalty, they would have received $1,325 more in the EITC had they not been married," explains AEI. "For cohabitating couples with one child who faced a penalty, they would lose $1,280 on average if they married, and couples not living together faced a penalty of $1,158."
According to AEI, married households have higher incomes than unmarried households which leads to more positive economic outcomes for children.
"It is no secret that the United States federal income tax system treats married couples differently than unmarried couples, even when they share children," explains AEI. "In some ways, the income tax system is more favorable to married couples than unmarried couples, but in other ways it penalizes marriage. The EITC is often cited as a tax expenditure that penalizes marriage."