United States: New Tax Law Has Major Changes For Alimony

Last Updated: January 25 2018
Article by Michael S. Goode and Ann Ralls Niewold

The new Tax Cuts and Jobs Act repeals the deduction for alimony payments after 2018. The United States Internal Revenue Code previously provided that the spouse paying alimony could deduct the alimony paid from his or her taxes, and the payee spouse had to pay income taxes on the alimony received. Pursuant to the new Act, alimony payments pursuant to agreements executed in 2019 or later would not be deductible by the payor or includible in the income of the payee. The reason stated by the official Section-By-Section Summary of the Ways and Means Committee Majority Tax Staff (the "Staff") for the change is to "eliminate what is effectively a 'divorce subsidy' under current law, in that a divorced couple can often achieve a better tax result for payments between them than a married couple can." The policy being enacted by this change, according to the Staff, is "that the provision of spousal support as a consequence of a divorce or separation should have the same tax treatment as the provision of spousal support within the context of a married couple . . . "  Rather than debate the actual policy, this article discusses its effect on taxation, as well as important takeaways regarding its effect on the divorce settlement process.

The first takeaway from the new law is that it would not change any pre-existing marital dissolution agreements executed prior to January 1, 2019. The original house bill had this change come into effect for any divorce or separation instrument executed in 2018. However, the conference agreement (as stated in H. Rept. 115-466) changed the effective date to encompass any divorce or separation instruments executed in 2019, thereby delaying this change for one year. Agreements executed in 2018 and before will continue to be taxed the same way they always have. However, agreements executed in 2018 will want to include the following language to ensure the tax deduction applies: "[t]he parties have agreed that this provision regarding the taxability and deductibility of this alimony shall continue beyond December 31, 2018." However, for any agreements in 2019 and beyond, the economics of divorce settlements will change.  For agreements entered into after January 1, 2019, the person paying the alimony will no longer be able to deduct it from their gross income, and the person receiving the alimony will not include it in their income.  

This change is significant, because generally the former spouse paying the alimony has a higher income and therefore is paying taxes at a higher rate. Couples then who have already firmly made the decision to divorce would likely benefit from reaching a settlement agreement in 2018, if alimony is going to be part of the plan. For example, a single person with an income over $200,000 (and below $500,000) would be taxed at 35%, whereas a single person with an income over $38,700 (and below $82,500) would be taxed at only 22%. If the payor spouse in the 35% tax bracket pays and deducts $40,000 per year in alimony, the deduction would save him or her $14,000 per year. The payee spouse in the lower tax bracket currently pays income taxes on the alimony received at a lower rate. Accordingly, the tax deduction for alimony payments saved money between the parties. 

For years, family law attorneys have negotiated divorce settlements with tax implications in mind. The elimination of the alimony deduction will likely have a substantial impact on divorce settlement negotiations in alimony cases. The tax deductibility of alimony was helpful in settling divorces as it created an incentive for spouses to pay more alimony to support his or her former spouse. 

While multiple factors are considered when determining an alimony obligation, two significant factors are the need of the financially disadvantaged spouse and the obligor spouse's ability to pay. The new tax law reduces the payor spouse's ability to pay by requiring him or her to pay tax on alimony, thus, generating additional tax revenue. As a consequence, less money will be available to alleviate the need of the payee, and the payor spouse will have a stronger argument for a lower alimony obligation. Even though the spouse receiving alimony will no longer be required to declare the alimony payments as income for tax purposes, less money will be available between the parties due to the alimony payments being taxed to the payor spouse at the higher tax rate versus the payee spouse at a lower tax rate. Thus, the new tax law will likely lead to a reduction in the amount of alimony awarded. Accordingly, it is imperative for family law attorneys to consider these changes when reviewing or relying on prior alimony obligations ordered in cases with similar facts, but under prior tax law.  

Finally, another important issue to consider is that under the prior law (i.e., before 2018) separately stated attorney's fees incurred for the purposes of obtaining alimony could be deductible (and similarly tax advice could be deducted as well), provided that the client itemized his or her deductions on Schedule A (and provided that the total miscellaneous itemized deductions exceeded 2% of the client's adjusted gross income). The Tax Cuts and Jobs Act suspends miscellaneous itemized deductions, so this legal and tax expense is no longer deductible.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Michael S. Goode
In association with
Related Topics
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Sign Up
Gain free access to lawyers expertise from more than 250 countries.
Email Address
Company Name
Confirm Password
Mondaq Newsalert
Select Topics
Select Regions
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions