Recent Alimony Tax Law Changes
As of January 1, 2019, alimony is no longer tax deductible to the spouse that is paying it. This change removed a significant benefit to the paying spouse. For example, under the prior tax law, if a husband was paying $50,000.00 a year in alimony to his ex-wife, and he was in the thirty percent (30%) tax bracket, the cost of that alimony to him would approximate $35,000.00 instead of $50,000.00.
So How Will Alimony Be Handled Now?
Generally speaking, due to the removal of the tax benefit to the payor spouse, he or she will pay less in alimony. A joint accountant would be helpful in determining the loss of the tax benefit and the appropriate amount to be paid to the payee spouse.