Divorce is stressful enough without worrying about how spousal support will affect your taxes. If you’re paying or receiving alimony, you might be wondering: Do I have to report this on my taxes? Can I deduct it? How will this impact my financial future?
The truth is, spousal support and taxes have changed significantly in recent years, and if you don’t understand the rules, you could end up with an unexpected tax bill—or miss out on financial opportunities. Since 2019, alimony is not tax-deductible for the payer, and the recipient no longer has to report it as income. These changes have major financial implications, especially in Georgia.
If you are considering divorce in 2025 or already have an alimony arrangement in place, the Georgia spousal support lawyers at Hobson & Hobson, P.C., want to help you. Our divorce attorneys will meet with you to help you understand how spousal support is taxed, what rules apply in Georgia, and how you can plan for the future.
The Tax Cuts and Jobs Act: A Permanent Shift in Alimony Taxation
For decades, alimony payments were tax-deductible for the payer and taxable income for the recipient. This system helped offset some of the financial strain on the paying spouse while ensuring the receiving spouse properly reported the income.
However, the Tax Cuts and Jobs Act (TCJA) of 2017 changed that. Under this law, which took effect for divorce agreements finalized on or after January 1, 2019, the tax treatment of spousal support shifted permanently:
- For the Paying Spouse: Alimony payments are no longer tax-deductible. This means the person making payments cannot subtract those amounts from their taxable income.
- For the Receiving Spouse: Alimony is not considered taxable income. The recipient no longer has to report payments as earnings or pay income taxes on them.
This change effectively shifts the tax burden from the recipient to the payer. Before the TCJA, the recipient—who was often in a lower tax bracket—would pay income tax on alimony at a lower rate. Now, the paying spouse must cover the full cost of spousal support without any tax relief.
A key detail to note is that while many provisions of the TCJA are set to expire at the end of 2025, this change to alimony taxation is permanent. That means even if tax laws change in the coming years, alimony will likely remain non-deductible for the payer and non-taxable for the recipient.
How the New Tax Rules Affect Divorce Settlements
If you are in the process of negotiating a divorce settlement, the tax treatment of spousal support is a crucial factor to consider.
For the paying spouse, the inability to deduct alimony from taxable income can make long-term payments more financially burdensome. Without the tax break, a higher overall amount may be required to reach the same level of financial support that would have been agreed upon under pre-2019 rules.
For the receiving spouse, not having to pay taxes on alimony can be beneficial. However, since alimony is no longer counted as taxable income, it may affect eligibility for certain tax credits and deductions, such as the Earned Income Tax Credit (EITC) or certain education-related tax benefits.
Because of these changes, some divorcing couples choose to structure their settlements differently. Instead of traditional alimony payments, some agreements involve lump-sum payments or the transfer of assets such as real estate or retirement funds. These alternatives can help minimize tax liabilities while still ensuring fair financial support.
What If Your Divorce Agreement Was Finalized Before 2019?
If your divorce or separation agreement was finalized before January 1, 2019, the old tax rules still apply:
- For the Paying Spouse: Alimony payments remain tax-deductible.
- For the Receiving Spouse: Alimony payments are considered taxable income and must be reported accordingly.
However, if a pre-2019 alimony agreement is modified after December 31, 2018, the new tax rules apply only if the modification explicitly states that the TCJA rules should govern the agreement. If the modification does not mention the new rules, the original tax treatment remains in place.
Because of this, it’s essential to carefully review any proposed modifications with both a family law attorney and a tax professional before making changes to an existing alimony agreement.
Alimony and Georgia State Taxes
While federal tax laws have changed, it’s also important to consider Georgia regulations. In Georgia, alimony payments are treated similarly to federal rules:
- For the Paying Spouse: Alimony payments are not tax-deductible.
- For the Receiving Spouse: Alimony payments are not taxable income.
This alignment between state and federal laws helps simplify tax reporting for individuals in Georgia. However, tax laws can be complex, and depending on your unique financial situation, other state tax factors may come into play. Consulting with a tax professional is the best way to ensure you are following all applicable rules.
How Can a Georgia Divorce Lawyer Help?
Divorce is already a difficult and stressful process. The changes in spousal support taxation add another layer of complexity, making it more important than ever to work with experienced professionals.
At Hobson & Hobson, P.C., we guide clients through divorce and spousal support in Georgia. Whether you are negotiating an initial alimony agreement or considering modifications to an existing one, our team is here to help.
We work closely with financial experts to ensure that our clients fully understand the tax implications of their settlements and make informed decisions that protect their financial future.
If you have questions about alimony, taxes, or divorce in Georgia, contact us today to schedule a consultation. Let us help you take the next step toward financial stability and peace of mind. Call our divorce law firm at 770-284-6153 or fill out our online contact form to get started.
Attorney Sarah Hobson at Hobson and Hobson, P.C. are powerful advocates for those who fight for better futures for those going through divorce and custody law matters.
