Federal tax treatment depends heavily on the date and wording of the divorce or separation instrument. For many agreements executed after 2018, alimony is not taxable income to the recipient and not deductible by the payer.
Older agreements and later modifications can be more complicated. State tax treatment may also differ from federal treatment.
Because tax treatment can materially affect settlement value, review the agreement date and terms with a qualified tax professional.
Related resources
Related FAQ
- What income counts for alimony?
Courts may consider wages, bonuses, self-employment income, rental income, investment income, and sometimes imputed earning capacity.
- How does retirement affect alimony?
Retirement may support a modification request if it changes income or need, but it does not always automatically end alimony.
- Is alimony tax deductible for the payer?
For most divorces finalized after 2018, alimony is not tax deductible for the payer under federal tax rules. Older agreements may be treated differently, and state tax rules or later modifications can affect the result.
- Does bonus income count toward alimony?
Bonus income may count toward alimony when it is regular, predictable, or part of a spouse's compensation. Courts often examine history, timing, employer practices, and whether the bonus is likely to continue.
Educational use only. SettleCompass provides educational estimates only and is not a law firm or legal advisor. Results vary by jurisdiction, judge, and case facts. Consult a qualified family law attorney before making decisions.