How to avoid the ‘survivor’s penalty’ before a spouse passes

It’s hard to lose a spouse, and a costly surprise makes it even more difficult, especially for older women — higher taxes. But financial experts say there are several ways to prepare.

In 2022, there was a 5.4-year life expectancy gap between U.S. sexes, according to data from the Centers for Disease Control and Prevention. Life expectancy at birth was 74.8 years for males and 80.2 years for females. 

The gap often leads to a “survivor’s penalty” for older married women, which can trigger higher future taxes, certified financial planner Edward Jastrem, chief planning officer at Heritage Financial Services in Westwood, Massachusetts, previously told CNBC.

The year a spouse dies, the survivor can file taxes jointly with their deceased spouse, known as “married filing jointly,” unless they remarry before the end of the tax year.

After that, many older survivors file taxes alone with the “single” filing status, which may include higher marginal tax rates, due to a smaller standard deduction and tax brackets, depending on their situation.

For 2024, the standard deduction for married couples is $29,200, whereas single filers can only claim $14,600. (Rates use “taxable income,” which is calculated by subtracting the greater of the standard or itemized deductions from your adjusted gross income.)

Higher taxes can be “the biggest shock” for widows — and it may be even worse once individual tax provisions sunset from former President Donald Trump’s signature legislation, George Gagliardi, a CFP and founder of Coromandel Wealth Management in Lexington, Massachusetts, previously told CNBC.

Before 2018, the individual brackets were 10%, 15%, 25%, 28%, 33%, 35% and 39.6%. But through 2025, five of these brackets are lower, at 10%, 12%, 22%, 24%, 32%, 35% and 37%.

Typically, the surviving spouse inherits the deceased spouse’s individual retirement accounts, and so-called required minimum distributions are…