Married Borrowers on IDR Plans: Should You File Taxes Jointly or Separately?

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Why Your Filing Status Matters
For income-driven repayment (IDR) plans, your monthly payment is calculated from your “discretionary income.” If you’re married, the tax filing status you choose—married filing jointly (MFJ) or married filing separately (MFS)—can change the income counted and, therefore, your payment. Some IDR plans consider only the borrower’s income if you file MFS, while others may include both spouses’ incomes regardless. The right choice can lower payments—but it may increase your annual tax bill.

When MFS Can Lower Payments
If your spouse earns significantly more than you or has no federal loans, filing MFS can keep your IDR payment tied closer to your own income. This is especially impactful for borrowers early in their careers, in residency/fellowship, or with variable income. However, MFS often reduces eligibility for certain credits and deductions and can raise your total taxes. The trade-off: lower student-loan payments vs. potentially higher taxes.

When MFJ Still Wins
If you and your spouse have comparable incomes—or both carry federal loans—MFJ may be simpler and cheaper overall. Some couples also prefer MFJ for broader tax benefits (e.g., certain credits, retirement deductions) and easier paperwork. If your plan already uses a “spousal exclusion” with documented separation of finances, the MFJ benefit may outweigh a modestly higher IDR payment.

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Run the Numbers Before You Certify
Project both scenarios annually before IDR recertification: (1) estimated IDR payment under MFJ vs. MFS and (2) the net tax difference between MFJ and MFS. The correct answer is the combined lowest cost (taxes + 12 months of student-loan payments), not just the lowest monthly payment.

Key Takeaways
Pick the filing status that minimizes your total annual outlay. Revisit the decision every year, since income, family size, and plan rules can change. And calendar your recertification deadline so your optimized strategy actually applies to the next 12 months of payments.