Under the New Tax Law, Is My Alimony Tax-Free?

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published 7 February 2018

Note: The editors of Kiplinger's Personal Finance magazine and the Kiplinger Tax Letter are answering questions about the new tax law from subscribers to our free Kiplinger Today daily email. See other reader Q&As about the new tax law, or submit your own question.

Question: I understand the new tax law reverses the rules for alimony, so that the payer no longer gets to deduct payments and the recipient no longer has to pay tax on alimony received. I was divorced in 2016. Does this mean the alimony payments I get are tax-free from now on?

Answer: No. The new rule does not go into effect until 2019, and only for divorces executed or modified after 2018. For divorces after December 31, 2018, alimony payments are no longer deductible nor must the recipient declare the amount as taxable income. The law specifically permits ex-spouses to modify an earlier divorce agreement to adopt the new rule after it goes into effect in 2019. Of course, both you and your ex would have to agree to such a change. If a pre-2019 divorce is not modified, the old rules apply: the payer can deduct payments and the recipient must pay tax on them.

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McCormally retired in 2018 after more than 40 years at Kiplinger. He joined Kiplinger in 1977 as a reporter specializing in taxes, retirement, credit and other personal finance issues. He is the author and editor of many books, helped develop and improve popular tax-preparation software programs, and has written and appeared in several educational videos. In 2005, he was named Editorial Director of The Kiplinger Washington Editors, responsible for overseeing all of our publications and Web site. At the time, Editor in Chief Knight Kiplinger called McCormally "the watchdog of editorial quality, integrity and fairness in all that we do." In 2015, Kevin was named Chief Content Officer and Senior Vice President.