When a marriage ends, financial matters don’t stop at dividing property or determining monthly support. Both spouses must also consider how spousal support (alimony) will affect their tax situation. While California’s Family Code governs when and how support is ordered, the IRS determines how those payments are treated for tax purposes.
At the Law Office of Stuart E. Bruers, based in Torrance, California, and serving clients throughout Los Angeles County, Orange County, the South Bay, and the San Gabriel Valley, we help clients understand these tax rules so there are no surprises when April arrives.
Major Changes Under Federal Law
For decades, paying spouses could deduct spousal-support payments on their federal income taxes, and receiving spouses had to report the payments as taxable income. That changed dramatically under the Tax Cuts and Jobs Act (TCJA), which took effect January 1, 2019.
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For divorces finalized before 2019: The old rules still apply unless the divorce judgment is later modified to adopt the new law.
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For divorces finalized after 2018: Spousal-support payments are no longer tax-deductible for the payor, and the recipient does not have to report them as income.
This change has shifted negotiations in many California divorce cases. Payors can no longer offset their payments with a deduction, while recipients often benefit from tax-free income. Our firm carefully structures support agreements to reflect these realities, ensuring clients aren’t caught off guard by their post-divorce tax liability.
State Tax Treatment in California
Because California generally conforms to federal tax law, the state follows the same rules:
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Payors cannot deduct spousal support on their California income tax return.
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Recipients do not pay state income tax on those payments.
However, other aspects of divorce—such as property transfers, retirement withdrawals, and capital-gain exclusions on a home sale—can still trigger California tax consequences. The Law Office of Stuart E. Bruers works with clients to identify and plan around these issues, coordinating with tax professionals when appropriate.
Special Considerations for Older Agreements
If your divorce was finalized before 2019, your spousal-support payments may still be tax-deductible. But modifying that order—even for unrelated reasons—could automatically bring it under the new, non-deductible rules. Before agreeing to any modification, it’s important to consult an attorney who understands how both family law and tax law interact. Our office regularly reviews older judgments for clients in Torrance, Long Beach, Pasadena, and Beverly Hills, ensuring any changes don’t create unintended tax exposure.
The Bottom Line
The IRS no longer acts as a silent “third party” subsidizing alimony payments. That means negotiations over spousal support now hinge even more on the parties’ actual post-tax income and living expenses. Having an attorney who understands both the financial and legal implications of support can make all the difference when reaching a fair settlement.
Take the Next Step
If you’re paying or receiving spousal support—or considering modifying an existing order—contact the Law Office of Stuart E. Bruers today. Serving clients across Torrance, Redondo Beach, Long Beach, Beverly Hills, and throughout Southern California, our firm brings over 30 years of family law experience to help you understand the tax and financial consequences of every support decision.