The effect of taxes on divorce has not been considered in previous empirical work on divorce. In this paper we examine the impact of the individual income tax on the likelihood of divorce. Using data from the Panel Study on Income Dynamics, we estimate a discrete-time hazard model of the probability of divorce from the first marriage. We find that couples respond to tax incentives in their decision to divorce, although these responses are typically small. We also estimate the impact of taxes on the separate divorce decisions of men and women. These results indicate that women clearly respond to tax incentives in their divorce decisions; the results for men are not always statistically significant.

Leslie A. Whittington is a visiting associate professor in the Graduate Public Policy Program at Georgetown University, and James Alm is a professor of economics at the University of Colorado at Boulder. The authors are grateful for helpful discussions with Elizabeth Peters and useful comments from Laura Argys, Stacy Dickert-Conlin, V. Jeffrey Evans, Cordelia Reimers, Harvey Rosen, and two anonymous reviewers. Lien Trieu provided valuable word processing assistance. The data used in this article can be obtained beginning in August 1997 through July 2000 from Leslie A. Whittington, Graduate Public Policy Program, Georgetown University, 3600 N St., NW, Suite 200, Washington, D.C. 20007.