January 29, 2026
Is Alimony Still Tax Deductible?
For years the deductibility of alimony was a valuable tax planning tool used by many divorcing couples to decrease their overall income tax liability. Alimony was deductible from the payer’s taxable income and included in the taxable income of the recipient. Because the payer’s tax bracket and thus tax rate was typically higher than the recipient’s, alimony payments offered a legitimate method of transferring income tax liability from the higher income spouse to the lower income spouse – resulting in less income tax being paid to the federal and CT governments.
So, for example, instead of the higher income payer paying 33 cents of tax on one dollar of income, the recipient might have paid 25 cents of tax on that same dollar for an 8 cent total savings. The spouses would increase the actual alomony payment in the court order to account for the tax transfer. Both spouses would win.
However, federal alimony tax law changed all this, eliminating this tax planning tool. The Tax Cuts and Jobs Act, eliminated the deduction for payers and income inclusion for recipients for divorce agreements signed on or after January 1, 2019.
Does this change in the tax law mean couples divorced before 2019 need to return to court to modify the alimony orders to relfect the new law? Fortunately the answer is no. Here’s why.
There is an important exception to the new law that many divorced persons and even some financial or tax professionals either forget about or are unaware : IF YOU WERE DIOVRCED IN 2018 OR EARLIER, YOUR EXISTING ALIMONY ARRANGEMENT MOST LIKELY STILL FOLLOWS THE SAME OLD TAX RULES. ALIMONY IS STILL DEDUCTIBLE BY THE PAYER AND INCLUDED IN THE RECIPIENT’S TAXABLE INCOME.
If you have any questions about what your divorce judgment means regarding alimony and taxes, confer with your divorce lawyer to get clarification. This is an important issue and could represent a substantial amount of money in your pocket rather than those of the federal or state governments.
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