The Tax Cuts and Jobs Act (Trump Tax Plan) changed the rules for the income tax treatment of alimony.
For divorces which occur after 2018:
the payor-spouse can no longer take an income tax deduction for alimony paid
the payee-spouse will no longer have to report the alimony received as taxable income
Therefore, one can expect that there will need to be a reduction in the amount of alimony paid (and received) for divorces which occur after 2018 (on or after January 1, 2018).
In many cases one party is ordered to pay child support and alimony. The child support is not a tax deduction for the payor, and not income to the payee. With the tax law changes, there will no longer be tax savings to the payor for alimony, which will likely reduce the payer’s ability to afford an alimony payment. (there will be two payments – child support and alimony – with no tax deduction)
Before the tax law changes, the alimony payment resulted in income shifting, reduced taxes to the payor, and higher taxes to the payee. Because the payor spouse’s tax rate was almost always higher than the payee spouse’s tax rate, this resulted in reduced total income taxes paid to the government.
The alimony payment is made after any payroll taxes are paid (social security taxes and medicare taxes). For a payor in a high tax bracket, the loss of this alimony deduction can potentially cost thousands of dollars per year.