United States: SCOTUS Same-Sex Marriage Decision Has Tax Implications For Couples And Their Employers

Last Updated: September 23 2015
Article by Dan Jones

On June 26, exactly two years since its decision in United States v. Windsor striking down part of the federal Defense of Marriage Act (DOMA), the U.S. Supreme Court issued another landmark ruling regarding same-sex marriage. In Obergefell v. Hodges, the Court held that same-sex couples have a constitutional right to marry, effectively making same-sex marriage legal in all 50 states. The decision has numerous implications for the tax, estate and retirement planning of same-sex couples and will also affect some employers in states that had not previously recognized same-sex marriage.

From Windsor to Obergefell

In its 2013 ruling in Windsor, the Supreme Court found that a section of DOMA was unconstitutional. As a result, the federal government was required to recognize same-sex marriages in the states where it's legal. In the wake of the ruling, the government announced that it would also recognize any same-sex marriage if the couple got married in a jurisdiction allowing such marriages — even if the couple lived in a state that did not.

Even though the Windsor ruling didn't recognize a constitutional right to marry, same-sex marriage has become legal in many more states since the 2013 ruling. By the time of the Obergefell decision, same-sex marriage was legal in about 75% of states. Now, under the 5-4 ruling, every state must allow same-sex marriage within its borders and recognize licensed same-sex marriages performed elsewhere.

Income tax effects

Perhaps the most obvious change for same-sex married couples living in states that didn't recognize their marriages will be the simplification of the annual tax filing process. Since Windsor, these couples typically would file their federal tax returns as married filing jointly or separately and then file as singles (or heads of households, if eligible) for state tax purposes. This could mean additional fees and costs related to tax preparation and, in some cases, higher overall tax liability.

Going forward, every same-sex married couple will be required to file as married (whether jointly or separately) at both the federal and state levels — and will be eligible for state-level spousal tax breaks. If filing as a married couple would result in a lower state tax liability in states that prohibited same-sex marriage until now, it might be possible to file amended returns seeking refunds for previous years in which the couple was married.

There also are circumstances where filing as a married couple could bump a same-sex couple into a higher tax bracket. This often occurs when spouses have comparable income and is sometimes referred to as the "marriage penalty."

The ruling's effects on health care benefits could also affect a same-sex couple's income taxes. Many employers have been offering domestic partner benefits that allowed an employee to obtain health benefits for his or her partner. But those benefits (and any other nonspousal benefits) represented taxable income for the employee if the couple wasn't married. After Obergefell, same-sex couples in every state can marry and obtain spousal coverage (where offered), which isn't taxable and may be cheaper than domestic partner coverage.

On the other hand, with same-sex marriage now legal nationwide, it's possible employers will begin to phase out domestic partner benefits that had originally been offered to provide equity in the benefits between married opposite-sex couples and committed same-sex couples who couldn't legally wed. If an employer took such action, affected same-sex couples would need to marry to take advantage of the benefits. Of course, such a change would also have implications for opposite-sex unmarried couples who've been taking advantage of domestic partner benefits.

Estate and retirement planning

The Court's ruling in Obergefell eliminates some potential estate-planning-related headaches for same-sex couples who previously couldn't legally marry.

For example, married couples can make unlimited gifts or bequests to each other without incurring state or federal gift or estate taxes. And they can pass their unused estate tax exemption to a surviving spouse. There was, however, a potential for complication at the state level. Thus, estate planning strategies that could work well at the federal level could create a substantial estate tax burden at the state level.

There are also potential benefits in the retirement arena, particularly with respect to survivor benefits available to a spouse. In a state that didn't recognize the marriage, a retiree spouse might not have been able to opt for a joint and survivor benefit with his or her spouse.

Social Security is another important factor in estate and retirement planning, and the Court's ruling could reap same-sex married couples thousands of dollars, or more, in benefits not previously available. Even after Windsor, same-sex married couples in states that didn't recognize their marriages couldn't collect Social Security spousal or survivor benefits. These couples will now qualify for the benefits.

For example, a spouse can receive up to half of the other spouse's benefit if it's more than his or her own. At death, if the deceased spouse received a higher Social Security benefit than the survivor, the survivor generally can receive the entire higher benefit.

Considerations for employers

The legal recognition of same-sex marriage could mean an increase in the cost of spousal benefits for some employers in states that hadn't previously recognized same-sex marriage. Health coverage is subject to state insurance law, which now can no longer treat same-sex spouses differently from opposite-sex spouses. For example, as indicated above, group health care plans will now need to cover same-sex spouses if they cover opposite-sex spouses, which could boost costs. Self-insured health plans can arguably continue to exclude same-sex spouses, but employers could invite discrimination lawsuits by doing so. Costs could also grow as more same-sex couples exercise their right to marry and subsequently seek spousal benefits.

All employers subject to the Family and Medical Leave Act and/or state family and medical leave laws will also be required to extend family and medical leave to employees to care for same-sex spouses, regardless of where the couple was married or resides. These employees also will be entitled to bereavement leave for their spouses, as well, where it's provided.

While the initial need to update policies, forms, employee handbooks, plan documents, beneficiary designations and the like may seem burdensome for affected employers, it's likely that the Court's ruling generally will reduce employers' administrative burden in the long run. Employers, for example, will no longer struggle with applying different benefits funding and tax rules depending on whether an employee is in a same-sex or opposite-sex marriage.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

In association with
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.