We investigate properties of an ultracold, two-component bosonic gas in a square optical lattice at unit filling. In addition to density-density interactions, the atoms are subject to coherent light-matter interactions that couple different internal states. We examine the influence of this coherent coupling on the system and its quantum phases by using Gutzwiller mean field theory as well as bosonic dynamical mean field theory. We find that the interplay of strong inter-species repulsion and coherent coupling affects the Mott insulator to superfluid transition and shifts the tip of the Mott lobe toward higher values of the tunneling amplitude. In the strongly interacting Mott regime, the resulting Bose-Hubbard model can be mapped onto an effective spin Hamiltonian that offers additional insights into the observed phenomena.

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