Under current law, a person paying financial support to an ex spouse can deduct that amount from their income and the receiving spouse must claim that support as income. That will all change come January 1, 2019. The Tax Cuts and Jobs Act 2018 (H.R.1) will eliminate the spousal maintenance (alimony) deduction and the requirement to include it as income. The ability to get a tax savings from that deduction has always been the little something that took the sting out of paying an ex spouse each month.
Now with that benefit going away for the payor, it remains to be seen how this will affect litigation over spousal maintenance. Parties in a divorce completed by December 31, 2018 will not be governed by this new law. This tax treatment will only apply to those divorces completed after December 31, 2018 and to those modifications of pre-2019 decrees that specifically state that the new Act will apply going forward to any spousal maintenance payments.