New Alimony Law For 2019

Alimony, often called spousal support or maintenance, will have a significant change on New Years’ Day in 2019. Under current laws, this has been deductible by the paying spouse and taxable to the receiving spouse. This benefited the family unit as the recipient paid tax at a lower rate than the payor deducted it at resulting in less in taxes. The deduction can save up to almost 50% in taxes for top earners in high-tax states so for every $100,000 alimony paid it only costs $50,000 after-tax. The recipient on the other had may only have to pay $20,000 in taxes on that $100,000 received resulting in $80,000 of after-tax income. The net savings to the family is the $30,000 difference.