For many couples, navigating divorce involves both emotional considerations and complex financial decision-making. One significant financial component in many divorces is spousal support, sometimes referred to as alimony. Spousal support can influence each spouse’s long-term financial stability, which makes it especially important to understand how tax law may affect support payments.
At Kraft Miles, A Law Corporation, our family law attorneys have spent decades helping individuals and families throughout the San Fernando Valley make informed decisions during divorce. Our goal is to help clients understand how changes in the law may impact their financial planning, negotiation strategies, and post-divorce life.
Beginning January 1, 2026, California will change how spousal support is treated for state tax purposes, aligning with federal tax laws already in place. This shift may influence when and how some couples choose to finalize their divorce agreements.
The Current Difference Between Federal and California Tax Treatment
In 2019, the federal Tax Cuts and Jobs Act (TCJA) eliminated the tax deduction for spousal support for divorce agreements executed on or after January 1, 2019. Under the federal rules:
The paying spouse cannot deduct spousal support payments on federal taxes.
The receiving spouse does not report the support payments as taxable income.
However, California did not adopt this federal change immediately. Instead, California continued to allow:
The paying spouse to deduct spousal support on state income tax returns.
The receiving spouse to report support payments as taxable state income.
This led to a situation where many divorced individuals were treating spousal support differently on state and federal tax filings.
What Will Change in 2026
California has now adopted legislation that will bring its tax treatment of spousal support in line with the federal system. However, this shift depends on when the divorce or separation agreement is executed.
For divorce or separation agreements executed on or after January 1, 2026:
The paying spouse will no longer be able to deduct spousal support on California state taxes.
The receiving spouse will no longer pay state income tax on the support received.
This means California will fully mirror the federal system for new agreements going forward.
Why the Timing of Final Judgment Matters
If a divorce is finalized and signed on or before December 31, 2025, the current California tax treatment may continue to apply for the duration of the support order—meaning the paying spouse may retain the state tax deduction. For some individuals, this creates a meaningful financial incentive to finalize their divorce before 2026.
Those who may benefit from finalizing a divorce before the change include spouses who:
Expect to pay spousal support and want to preserve the California deduction.
Want financial predictability and clarity under existing rules.
Are already close to reaching a full settlement agreement.
Conversely, those who expect to receive support may prefer the post-2025 treatment, where the support they receive is not taxed as income.
Considerations for Couples Currently Negotiating Divorce
As the deadline approaches, couples may want to discuss how these changes affect:
Their timeline for settlement
The amount and duration of support
Long-term tax planning and budget projections
For many people, both the financial and emotional stakes are high. Working with experienced legal counsel is essential to ensure that the timing and terms of support align with each party’s goals.
Why Legal Representation Still Matters
Even when spouses agree on most issues, spousal support calculations can be complex. Support decisions intersect with:
Income and cash flow analysis
Long-term financial planning
Tax implications
Other divorce terms, such as property division and child support
Without legal guidance, it is possible to overlook key financial considerations or agree to terms that have unintended long-term consequences. It is important to make sure that your attorney knows how to calculate support while considering this new tax implication.
How Kraft Miles, A Law Corporation Can Assist You
At Kraft Miles, A Law Corporation, we have more than 60 years of combined experience guiding clients through divorce and family law matters with clarity, compassion, and strategic insight. Our team is well-versed in the financial and legal implications of support arrangements, and we work closely with clients to ensure they fully understand how changing laws may affect their decisions.
We proudly serve individuals and families in:
West Hills
Woodland Hills
Calabasas
Topanga
Tarzana
Encino
Westlake Village
Hidden Hills
Whether you are beginning the divorce process or nearing a final agreement, now is the time to review how the January 1, 2026, change may affect your circumstances and goals.
Taking the Next Step
If you have questions about how this upcoming change to spousal support taxation may affect your divorce, we welcome you to contact us to schedule a confidential consultation. Our attorneys will take the time to understand your situation and help you make informed, forward-focused decisions.
Contact Kraft Miles, A Law Corporation online or call (818) 462-5076 today to schedule your consultation.