Current law on Spousal Support
Currently the payor of spousal support may deduct his or her spousal support payments from his or her gross income. The spousal support is taxable as income to the recipient.
New law on Spousal Support
Starting in 2019 NEW orders for spousal support will not be deductible by the payor and not reportable as income by the recipient. It has yet to be decided whether new orders will include modification to previous orders. However, I am hearing from family law accountants that modifications will probably be considered as new orders.
Why this change to spousal support deductions is important
The current tax law gives a break to both the payor and payee of spousal support. This is because the payor is normally at a higher tax bracket than the payee, so more of the income is taxed. If the payor is taxed at 20% and the payee at 0%, an annual spousal support payment of $12000 is not taxed, but would have been taxed $2400 under the new law. This will affect the payee also as the court has to take into consideration the tax consequences to the parties when awarding spousal support. Consequently, less spousal support is likely to be awarded given these tax consequences.