Marriage and Tax Australia 2025: What Couples Need to Know

Congratulations! You’ve found your person, planned the perfect wedding, and now you’re wondering if the ATO cares about your new relationship status. Spoiler alert: they absolutely do, just not in the way you might expect.

Here’s the thing about marriage and tax in Australia — it’s not as simple as it sounds. There’s no romantic joint tax return where you combine everything into one big happy financial family. Instead, you get something much more interesting (or confusing): a system where you still lodge separate returns, but your partner’s income suddenly becomes very relevant to your tax obligations.

We’ve been helping Australian couples navigate this maze for over 50 years, and the confusion is real. One day you’re a carefree single person responsible only for your own tax affairs, and the next you’re trying to figure out whether your partner’s salary affects your Medicare levy surcharge. (Hint: it probably does.)

The good news? Understanding how marriage affects your tax isn’t rocket science. The potentially expensive news? Getting it wrong can cost you thousands in penalties, lost benefits, or unnecessary surcharges. With the ATO keeping a close eye on relationship declarations and family benefit calculations, getting your marital status right on your 2024-25 tax return is more important than ever.

Quick Summary: Marriage and Tax Reality Check

The Australian tax system treats married couples quite differently from many other countries. While you’ll still lodge individual returns, your relationship status creates a web of interconnected obligations and opportunities that can significantly impact your finances.

Here’s what every couple needs to understand:

Australia doesn’t have joint tax returns — you’ll always lodge individually
Your partner’s income affects your Medicare levy surcharge calculations
Family tax benefit eligibility depends on your combined household income
Private health insurance rebates are calculated using both incomes
Certain tax offsets become available (though most have restrictive eligibility)
Relationship status must be declared accurately to avoid penalties

The bottom line is simple: marriage doesn’t mean joint tax returns, but it does mean your financial lives become interconnected for tax purposes in ways many couples don’t expect. Think of it as remaining individuals while being assessed as a household for specific calculations.

So, Does the ATO Actually Care That You’re Married?

Absolutely yes, but probably not for the reasons you’re thinking. The Australian Taxation Office doesn’t care about your wedding photos or whether you’ve legally tied the knot, but they’re very interested in whether you’re living together as a couple on a “genuine domestic basis.”

The ATO’s relationship recognition rules are actually quite progressive. They recognise marriages, de facto relationships, and same-sex couples equally. You don’t need a marriage certificate — if you’re living together in a committed relationship, sharing finances, and functioning as a household unit, you’re considered a couple for tax purposes.

“Many clients are surprised to learn they’re considered ‘married’ for tax purposes long before they walk down the aisle,” explains our senior family tax advisor Jennifer McMahon.” The ATO looks at the reality of your relationship, not just the legal paperwork.”

The genuine domestic basis test considers factors like shared living arrangements, financial interdependence, the nature of your commitment, and how you present yourselves to others. Basically, if your friends and family consider you a couple and you’re sharing a life together, the ATO probably does too.

This matters because your relationship status affects everything from Medicare levy surcharge calculations to family benefit entitlements. Getting this declaration wrong isn’t just paperwork — it can result in significant financial consequences.

What Actually Changes When You Become a Tax Couple?

The biggest shock for new couples is discovering that while you still lodge individual tax returns, your partner’s income suddenly becomes relevant to several important tax calculations.

Medicare Levy Surcharge: The Big One

This is where many couples first notice the impact. If you’re single and earn over $97,000 without private health insurance, you’ll pay the Medicare levy surcharge. But as a couple, the threshold jumps to $194,000 for your combined income. Sounds better, right? Here’s the catch: the calculation becomes more complex, and strategic planning becomes essential.

The Medicare levy surcharge rates for 2024-25 range from 1% to 1.5% of your income, which can add thousands to your tax bill if you’re caught off-guard. Understanding these thresholds becomes crucial for household budgeting.

Family Tax Benefits: The Game Changer

If you have children, your combined family income determines your family tax benefit payments. Getting married or moving in together means Services Australia will reassess your payments based on both incomes, which could significantly increase or decrease your entitlements.

The interaction between these benefits and your tax obligations creates a complex web that requires careful consideration when making major financial decisions.

Private Health Insurance Rebate: Combined Income Effects

The private health insurance rebate is calculated on your combined income as a couple. If your partner has a high income, your rebate might reduce or disappear entirely, making your health insurance more expensive.

This creates an interesting dynamic where one partner’s career success can directly impact the household’s healthcare costs.

Superannuation Opportunities

On the positive side, being in a relationship opens up new super strategies. You might be eligible for the spouse super contribution tax offset or be able to make spouse contributions that benefit both your retirement savings and current tax position.

These opportunities often go unnoticed by couples who focus solely on the additional obligations rather than exploring the potential benefits.

How Combined Income Actually Affects Your Life

Understanding the combined income impact is crucial for smart financial planning as a couple. The most significant effect comes through the Medicare levy surcharge, which can add a substantial amount to your tax bill if you’re not prepared.

For 2024-25, couples with combined incomes over $194,000 face the Medicare levy surcharge if they don’t have appropriate private health insurance. The surcharge operates in tiers:

1% for combined incomes $194,001-$226,000
1.25% for combined incomes $226,001-$302,000
1.5% for combined incomes above $302,000

A couple earning a combined $220,000 without health insurance would pay an extra $2,200 in Medicare levy surcharge. For many couples, this makes private health insurance financially attractive, even if they wouldn’t otherwise consider it necessary.

Family tax benefits operate on different combined income tests. The FTB Part A supplement cuts off entirely when your combined family income exceeds $80,000, while FTB Part B eligibility ends when the primary earner’s income exceeds approximately $120,000.

“We often see couples where a small income increase for one partner triggers multiple benefit reductions or surcharge obligations,” notes David Wong. “That’s why tax planning as a couple often involves thinking about the timing of income, not just the amount.”

Smart Tax Planning Strategies for Couples

Effective tax planning for couples involves understanding how to work within the combined income tests while maximising your individual benefits and minimising overall tax obligations. The key is thinking strategically about income timing, deductions, and benefit eligibility.

Salary Sacrifice: Your New Best Friend

If one partner is approaching a Medicare levy surcharge threshold, salary sacrificing into superannuation can reduce assessable income below the threshold. The concessional contribution cap for 2024-25 is $30,000, providing significant scope for tax planning.

This strategy works particularly well when one partner is close to an income threshold that would trigger additional costs or reduce benefits.

Spouse Super Contributions

If your partner earns less than $40,000, you can contribute up to $3,000 to their super and potentially claim the spouse super contribution tax offset worth up to $540. This strategy works particularly well for families where one partner has taken time off for child-rearing or study.

The beauty of this arrangement is that it benefits both your current tax position and your long-term retirement planning.

Investment Asset Allocation

While income splitting is limited under Australian tax law, couples can still consider which partner should hold investment assets to optimise the overall tax outcome. This works best when one partner is in a lower tax bracket, but any arrangements must comply with anti-avoidance provisions.

Careful consideration of ownership structures can make a meaningful difference to your household’s overall tax burden.

Timing Strategies

Consider timing certain deductions or income recognition to optimise your combined position. If you’re close to a family tax benefit threshold, bringing forward some deductions or deferring some income might keep you under the limit and save thousands in lost benefits.

These strategies require careful planning and often benefit from professional advice to ensure compliance with tax laws.

Busting Common Marriage and Tax Myths

Let’s clear up some persistent misconceptions that cost couples money and cause unnecessary stress.

Myth 1: Couples Can Lodge Joint Tax Returns
Wrong. Australia operates on an individual taxation system. Each person must lodge their own return regardless of relationship status. Trying to combine incomes or claim each other’s deductions is not permitted and can result in penalties.

Myth 2: Marriage Automatically Provides Tax Benefits
Not really. While certain offsets and concessions are available to couples, most require specific circumstances like having dependants or earning below certain thresholds. Marriage itself doesn’t provide automatic tax advantages.

Myth 3: Couples Can Freely Split Income
Australia’s anti-avoidance rules prevent most income splitting arrangements. Any attempts to artificially direct income to a lower-tax partner can result in the income being attributed back to the person who earned it, plus penalties.

Myth 4: Partner’s Tax Debt Becomes Your Responsibility
In most cases, tax debts remain individual obligations. However, there are limited circumstances where the ATO can pursue collection from a spouse’s assets, particularly involving joint business activities.

“We regularly see couples who think they can claim each other’s work expenses or arbitrarily split rental property income,” explains our senior advisor Mark Thompson. “The reality is that deductions must be claimed by the person who incurred the expense, and income must be declared by the person who earned it.”

Planning for Life’s Big Moments as a Couple

Marriage often coincides with other major life events that have significant tax implications. Understanding these connections helps you make better financial decisions as your relationship evolves.

Buying Your First Home Together

First home buyer grants and concessions typically apply based on whether either partner has previously owned property. Understanding these rules before house hunting can help you plan your purchase timing and structure for maximum benefit.

The interaction between individual property ownership history and combined income thresholds creates opportunities for strategic timing of purchases.

Having Children

Children introduce complex interactions between tax offsets, family benefits, and childcare subsidy calculations. The combination requires careful planning to optimise your family’s overall financial position.

The timing of when children arrive can significantly impact your tax planning strategies and benefit entitlements.

Career Changes and Study

When one partner is considering a career change, unpaid leave, or returning to study, the impact on your combined income thresholds needs to be factored into the decision. Sometimes the tax and benefit implications can significantly affect the financial viability of career moves.

Investment Decisions

Major investment decisions now need to consider both partners’ tax positions and how returns will affect your combined income for various thresholds and benefit calculations.

Getting Professional Help With Your Couple Tax Strategy

The interaction between individual tax obligations and relationship-based entitlements can be complex, particularly when children, property investments, or business income are involved. Many couples find that professional advice pays for itself through optimised tax outcomes.

At ITP, we’ve been helping Australian couples understand their tax obligations for over 50 years. We regularly identify opportunities that couples miss when preparing their own returns, and we help families develop strategies that work with their life goals, not against them.

Whether you’re newlyweds trying to understand your obligations, planning major life changes, or dealing with complex family circumstances, our experienced tax advisors can help you navigate the system effectively.

Consider booking a consultation if you’re facing significant income changes, have complex family situations, or simply want to ensure you’re making the most of your opportunities as a couple. You can visit any of our office locations across Australia to discuss your specific situation with someone who understands how the tax system affects modern Australian families.

Remember, good tax planning for couples isn’t just about minimising tax — it’s about making informed decisions that support your life goals while ensuring you meet all your obligations.

Your Marriage and Tax Questions Answered

Do I have to include my partner’s income on my individual tax return?

No, you don’t include your partner’s income in your own income calculations, but you must declare their income amount when asked. This information is used to calculate your Medicare levy surcharge, family tax benefits, and eligibility for certain offsets. Providing incorrect partner income information can result in penalties and benefit recovery processes.

Can I claim any tax benefits for supporting my spouse?

Limited tax benefits are available. The main option is the spouse tax offset, worth up to $540 if your spouse earns less than $40,000. You may also be eligible for the spouse super contribution tax offset if you contribute to your spouse’s super and they meet the low-income requirements. However, these offsets have restrictive eligibility criteria.

Does getting married affect my HECS-HELP repayments?

No, HECS-HELP repayments are calculated on your individual income, not your combined household income. Getting married doesn’t change your repayment obligations unless your individual income changes. However, if you’re receiving family tax benefits, your HECS-HELP payments might affect when those benefits are calculated.

What happens to our tax obligations if we separate during the tax year?

Your relationship status for tax purposes is determined based on your situation for the majority of the year, or your status at 30 June. You need to notify Services Australia about relationship changes as they affect family benefit calculations, and you should update your tax file number declaration with your employer if your circumstances change significantly.

Can we both claim the same work-related deductions if we work in the same industry?

Each person can only claim deductions they personally incurred. If you both work in the same industry and have similar expenses, you can each claim your own legitimate work-related deductions. However, you cannot claim the same expense twice, and any shared expenses must be apportioned based on actual usage.

How does our combined income affect private health insurance decisions?

Your combined income determines both the Medicare levy surcharge thresholds and the private health insurance rebate you’re entitled to. For couples earning over $194,000 combined, private health insurance often becomes financially attractive to avoid the Medicare levy surcharge, even if you wouldn’t otherwise consider it necessary.

Other Helpful Articles:

Getting Married and Taxes in Australia: What Couples Need to Know for 2025