Update: 2015 report is here .
Update. Utah will allow couples who married before the end of 2013 to file jointly.
Gay and lesbian couples holding a valid marriage certificate from a state that recognizes same-sex marriage will be able to file a joint federal tax return for tax year 2013. Just under half the states—22—do not recognize same-sex marriage while requiring taxpayers to reference their federal return when filing state income tax.
Revenue officials in these states must therefore provide guidance for taxpayers.
- 5 states have adopted the “Wisconsin approach,” instructing same-sex taxpayers to allocate income to two single returns using a state-provided schedule (Arizona, Kansas, North Dakota, Ohio, and Wisconsin).
- 12 states have adopted the “Louisiana approach,” instructing same-sex taxpayers to complete pro forma federal single tax returns and use that information for the state returns (Georgia, Idaho, Indiana, Kentucky, Louisiana, Michigan, Nebraska, North Carolina, Oklahoma, South Carolina, Virginia, and West Virginia). These “dummy” federal tax returns are not filed with federal authorities but used only for calculating state tax liability. (Utah also issued guidance using this approach prior to the December 2013 court decision permitting same-sex marriage in the state.)
- 1 state (Alabama) instructs same-sex taxpayers to apportion income according to a ratio.
- 3 states will allow same-sex taxpayers to file jointly (Colorado, Missouri, and Oregon). UPDATE: Utah also now.
- Montana will advise same-sex taxpayers not to file jointly but concedes that it has no way of verifying that information.
This report updates our August 2013 report on the status of state guidance, reflecting statements issued and made by state revenue officials, as well as conversations by Tax Foundation staff with officials.
In June 2013, the U.S. Supreme Court struck down Section 3 of the Defense of Marriage Act (DOMA), invalidating the federal definition of marriage as between one man and one woman.  With respect to tax returns, the Internal Revenue Service (IRS) had to choose either (1) a “state of residency” standard, where the federal government piggybacks on the state definition of marriage in each state, or (2) a “state of celebration” standard, where the federal government recognizes a marriage if the couple holds a valid marriage certificate issued by any state. It was important to clarify matters, because a married couple filing jointly can face significantly different tax burdens than two single taxpayers earning the same income. 
In August 2013, the IRS opted for the “state of celebration” standard for recognizing marriages for tax year 2013. Couples may also seek federal tax refunds for the 2010, 2011, and 2012 tax years if they were married in those years. Consequently, any same-sex couple possessing a marriage license from a state whose laws authorize the marriage of two individuals of the same sex may file a joint federal tax return. This is in line with private industry practice, which provides benefits to any employee that can demonstrate they are married, regardless of where they live. For gay and lesbian couples in
the 17 states and the District of Columbia that recognize same-sex marriage, they can file joint returns both at the federal and state levels and potentially retroactively for past years as well.
Further guidance is needed, however, by the 22 states that do not recognize same-sex marriage but require taxpayers to reference the federal tax return when filling out their state tax form. Same-sex couples in those states will be able to file a joint federal income tax return but need guidance on how to prepare their state income tax return. Assuming a state does not opt to recognize same-sex marriage by next year, viable options pursued by states include:
- Permitting taxpayers to “split” their income from the joint federal return into two state returns. Wisconsin was the first state to adopt this approach, which is being followed in 5 states.
- Permitting taxpayers to reference a pro forma, or “dummy,” federal return reflecting single filing status for their state return. Louisiana was the first state to adopt this approach, which is being followed in 11 states.
- Permitting taxpayers to apportion income between two single returns using a ratio. Alabama is following this approach.
Since August 2013, we have communicated with states to ensure that they provide guidance to taxpayers. An option that no state should adopt, and no state has adopted, is to “delink,” or “decouple,” the state’s tax code from the federal tax code. Such a step would impose huge compliance costs on nearly all state taxpayers and potentially cause economic damage. Such a response would be disproportionate since other viable options are available.
Tax Filing by Same-Sex Couples Before and After the IRS Ruling
To illustrate, take two same-sex couples, one living in Maryland (which recognizes same-sex marriage) and one living in Virginia (which does not). The Maryland couple, in the past, has been able to file a joint state return but has had to file separate federal returns. (Because Maryland’s return references information on the federal return, Maryland and other same-sex marriage states have previously permitted taxpayers to prepare a pro forma, or “dummy,” federal joint return to reference when preparing the state return.) Under either a “state of celebration” or “state of residency” rule, the Maryland couple would now be able to file joint returns at both the federal and state levels.
The Virginia couple has never been able to file joint returns at the federal or state levels, but because the IRS has adopted a “state of celebration” standard, they may now file a joint federal return so long as they have a marriage certificate issued by another state that recognizes same-sex marriage. Under a “state of residence” standard, state law defining marriage would apply and the couple would not be able to file federal or state joint returns. But under a “state of celebration” standard, the couple can file jointly at the federal level but must continue to file separately at the state level.
Table 1: Differences between “State of Residency” and “State of Celebration” Standards