Q: In one of your Q&A articles, you mentioned a so-called “widow’s penalty.” Could you give me some insight as to how much that is? My wife and I had a taxable income in 2022 of just under $100,000. — Cam in Indialantic

A: I’d be happy to, Cam. The widow’s penalty is not an explicit penalty imposed by the tax code like those for taking money from a retirement plan before 59 ½ or underpaying one’s taxes through withholding or estimated payments during the year.

See, the tax rates applicable to the same taxable income are higher for singles than couples filing a joint return. As a result, many surviving spouses pay more in taxes than the couple paid prior to the deceased spouse’s death. This dynamic is what some call the “widow’s penalty.”

An example can help. A $100,000 taxable income comprised solely of ordinary income in 2022 for a couple with no dependents filing a joint return resulted in federal income tax of $13,234. That is a 10% tax rate on the first $20,550, 12% on the next $63,000 and 22% on the last $16,450.

If one spouse died in 2022, the surviving spouse would file a joint return for 2022 but file as a single in 2023. A $100,000 taxable income comprised solely of ordinary income in 2023 for a single filer would result in federal income tax of $17,400. The single filer pays a tax rate of 10% on the first $11,000, 12% on the next $33,725, 22% on the next $50,650, and 24% on the last $4,625.

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The $4,166 difference between the 2022 and 2023 tax bill is the widow’s penalty. In this case, it’s a 31% increase over the 2022 tax for the exact same amount and type of taxable income.

In real life, most surviving spouses experience changes in the amount and type of income they receive. For instance, when either spouse passes away, the smaller of the two Social Security benefit checks coming to the household stops. It is also common for pension payments to reduce at the death of the pensioner. On the other hand, if a couple has been delaying taking distributions from retirement plans and IRAs until they are required to do so, a surviving spouse can see a jump in income when the Required Minimum Distributions begin.

Income isn’t the only thing that can change. For those that do not itemize, the standard deduction for joint filers is twice that of single filers. A widow can see their deduction cut by half or more if the deceased was over 65 or blind. So, if gross income does not change, the smaller deduction means a higher taxable income. Applying a less favorable rate schedule to a higher taxable income increases the tax bill even more.

For instance, let’s say the $100,000 taxable income resulted from $125,900 gross income (all ordinary) less the $25,900 standard deduction for joint filers in 2022.  If the surviving spouse receives the identical income of $125,900 in 2023 and does not itemize, the taxable income is $112,050 because a single filer’s  standard deduction in 2023 is only $13,850. The resulting tax bill is $20,292. That is nearly $7,000 more for the survivor than the couple’s 2022 tax bill for the exact same amount and type of income.

Dan Moisand, CFP® is a past national president of the Financial Planning Association and has been featured as one of America’s top independent fee-only financial planners by at least 10 financial planning publications. For more info, visit  www.moisandfitzgerald.com or call him at 321-253-5400, Ext. 101.

This article originally appeared on Florida Today: The 'widow's penalty': Know how it affects taxes upon a spouse's death