The ‘singles tax’ means you often pay more for going it alone. Here’s how it works
- Written by Alicia Bubb, Research & Teaching Sessional Academic, RMIT University
Heard of the “singles tax”? Going it alone can also come with a hidden financial burden you may not be aware of.
Obviously, this isn’t an official levy paid to anyone in particular. It simply refers to the higher costs single people face compared to couples or families.
Single-person households have been on the rise[1] in Australia. It’s projected they’ll account for up to 28% of all households[2] in 2046.
People are marrying later, divorce rates remain high[3] and an ageing population means more people live alone in older age. Many people also make a conscious decision to remain single, seeing it as a sign of independence[4] and empowerment.
This is part of a global trend[5], with singledom increasing in Europe, North America and Asia.
So, how does the singles tax work – and is it worse for some groups than others? What, if anything, can we do about it?
Why does being single cost more?
One of the biggest drivers of the singles tax is the inability to split important everyday costs. For example, a single person renting a one-bedroom apartment has to bear the full cost, while a couple sharing it can split the rent.
Singles often miss out on the savings from bulk grocery purchases, as larger households consume more and can take better advantage of these deals.
Fixed costs for a house like electricity, water and internet bills often don’t increase by much when you add an extra user or two. Living alone means you pay more.
These are all examples of how couples benefit from economies of scale[7] – the cost advantage that comes from sharing fixed or semi-fixed expenses – simply by living together.
My calculations, based on the most recent data[8] from the Australian Bureau of Statistics (ABS), show that singles spend about 3% more per person on goods and services compared to couples.
Compared to couples with children, single parents spend about 19% more per person. While government support mechanisms such as the child care subsidy[9] exist, many single parents find them insufficient[10], especially if they work irregular hours.
Beyond the essentials
The singles tax extends beyond our “essential needs” and into the costs of travel, socialising and entertainment.
Solo travellers, for example, may encounter something called a “single supplement[11]” – an extra fee charged for utilising an accommodation or travel product designed for two people.
Streaming services such as Netflix and Spotify offer family plans at slightly higher prices than individual ones, making them more cost-effective for larger households.
A global phenomenon
Reports from around the world paint a similar picture.
In the United States, research by real estate marketplace Zillow found singles pay on average US$7,000 ($A11,100) more[13] annually for housing, compared to those sharing a two-bedroom apartment.
In Europe, higher living costs and limited government supports put singles at a disadvantage[14]. And in Canada, singles report feeling the pinch of rising rent and grocery prices[15].
The tax systems of many countries can amplify the financial burden of being single, by favouring couples and families[16].
In the United States, for example, tax policies intended to alleviate poverty often exclude childless adults[17], disproportionately taxing them into poverty.
The Earned Income Tax Credit (EITC) reduces tax liabilities by providing refundable credits to low-income workers. It’s had some significant benefits for families, but offers minimal support[18] to single, childless individuals.
As economist Patricia Apps argues[20], tax and transfer policies often fail to account for the complexities of household income distribution.
These systems favour traditional family structures by providing benefits like spousal offsets or joint income tax breaks. Single individuals and single-parent households are left bearing a disproportionate financial burden.
Who is affected the most?
The singles tax disproportionately impacts women, who are more likely to live alone[21] than men.
This can compound existing financial pressures such as the gender pay gap[22], taking career breaks, and societal expectations leaving them with lower retirement savings[23].
For older women, the singles tax adds another layer of difficulty to maintaining financial security[24].
And it can seriously exacerbate financial pressures on single mothers. Many rely on child support payments, which are often inconsistent or inefficient, leaving them financially vulnerable[25].
Working part-time or in casual roles due to caregiving responsibilities further limits their earning potential.
There are unique challenges for single men, too, who may lack the same access to family-oriented subsidies[27] and workplace flexibility[28]. Single men may also face societal expectations to spend more on dating[29] or socialising.
Alarmingly, men are disproportionately represented among the homeless population, making up 55.9% of people experiencing homelessness[30], and single men have a higher risk of premature death[31].
Growing recognition
While the singles tax highlights big systemic inequities, there are signs the issue is receiving more attention.
Some advocacy groups are pushing for better financial protections[32] and child support reforms for single mothers.
Similarly, efforts to address homelessness[33] have gained momentum, with increased attention to advocacy and services for single men[34] facing housing insecurity.
There is also the potential to design tax systems[35] to reduce these inequities. Tax systems that treat individuals as economic units, instead of basing benefits on household structures, could mitigate the singles tax and create a fairer system for all.
References
- ^ on the rise (aifs.gov.au)
- ^ 28% of all households (www.abs.gov.au)
- ^ high (aifs.gov.au)
- ^ sign of independence (www.theguardian.com)
- ^ global trend (ifstudies.org)
- ^ Gorodenkoff/Shutterstock (www.shutterstock.com)
- ^ economies of scale (academic.oup.com)
- ^ data (www.abs.gov.au)
- ^ child care subsidy (www.education.gov.au)
- ^ find them insufficient (aifs.gov.au)
- ^ single supplement (www.theaustralian.com.au)
- ^ Vantage_DS/Shutterstock (www.shutterstock.com)
- ^ US$7,000 ($A11,100) more (zillow.mediaroom.com)
- ^ at a disadvantage (www.theparliamentmagazine.eu)
- ^ rising rent and grocery prices (www.cbc.ca)
- ^ favouring couples and families (journals.sagepub.com)
- ^ exclude childless adults (www.cbpp.org)
- ^ minimal support (www.acf.hhs.gov)
- ^ WPixz/Shutterstock (www.shutterstock.com)
- ^ argues (link.springer.com)
- ^ live alone (aifs.gov.au)
- ^ gender pay gap (www.wgea.gov.au)
- ^ lower retirement savings (utppublishing.com)
- ^ maintaining financial security (theconversation.com)
- ^ financially vulnerable (www.csmc.org.au)
- ^ Drazen Zigic/Shutterstock (www.shutterstock.com)
- ^ family-oriented subsidies (www.wgea.gov.au)
- ^ workplace flexibility (www.unisa.edu.au)
- ^ spend more on dating (blog.ing.com.au)
- ^ experiencing homelessness (www.abs.gov.au)
- ^ premature death (www.sciencedirect.com)
- ^ better financial protections (www.csmc.org.au)
- ^ homelessness (www.news.com.au)
- ^ men (chp.org.au)
- ^ design tax systems (dx.doi.org)
