Alimony: Definition, Types, and Tax Rules

What Is Alimony?

Alimony refers to court-ordered payments awarded to a spouse or former spouse within a separation or divorce agreement. The reason for alimony is to provide financial support to the spouse who makes a lower income, or in some cases, no income at all.

Known as spousal maintenance in some states, alimony can be awarded to a husband or wife. In cases for which there are children involved—and it's a traditional, heterosexual marriage—the man has historically been the breadwinner, and the woman may have given up a career to raise the children, which puts her at a financial disadvantage after a separation or divorce. The laws in many states dictate that a divorced spouse has the right to live the same quality of life they previously had when married. Some couples might be able to seek an annulment of their marriage. The grounds for annulment and filing process vary by state but can remove spousal support obligations.

Understanding Alimony

How much alimony a spouse must pay, and for how long they must pay it, depends on how long the marriage lasted and current and future potential incomes for both spouses. Many factors differ from state to state. However, if a couple separates or divorces after 10 years, alimony is usually awarded unless both spouses have the same earning power.

If their earning power is not equal, the lower-earning spouse will likely receive alimony payments, which may be perpetual or for a temporary period. Alimony payments may not be issued if both spouses have similar annual incomes or if the marriage is fairly new.

Types of Alimony

The types of alimony available can vary from state to state. In California, for example, there are five:

• Temporary alimony—Paid while the divorce is pending, this can include divorce costs and daily expenses, and it ceases when the divorce is finalized.
• Permanent alimony—Paid on a monthly basis, this continues until the death of either spouse or the remarriage of the lower-earning spouse.
• Rehabilitative alimony—Paid while the lower-earning spouse attempts to increase their employment chances through education or training or while on a job search, it ceases either after a fixed period of time or when the payee becomes self-supporting.
• Reimbursement alimony—Paid to reimburse a lower-earning spouse for expenses such as tuition or work training, it is not ongoing.
• Lump-sum alimony—Paid in lieu of a property settlement, this is ordered when one spouse doesn’t want any property or items of value from their marital assets.

As evidenced by the alimony types above, the termination of alimony is flexible and open to negotiation. Other situations that might serve as sufficient reason to stop payments include retirement, children no longer requiring the care of a parent, and a judge's determination that a recipient is not making a good-faith effort to become self-sufficient.

How Is Alimony Taxed?

The rules regarding the taxation of alimony have changed. For the receiver, alimony payments used to be considered taxable income by the Internal Revenue Service (IRS); for the payer, they were a deductible expense. However, The Tax Cuts and Jobs Act of 2017 eliminated the tax deduction for alimony payments for divorce agreements executed after Dec. 31, 2018, while also decreeing that alimony recipients will no longer owe federal tax on this support. 

Alimony vs. Child Support

Alimony should not be confused with child support. Alimony payments are paid to a spouse or former spouse for their support, while child support payments are paid to a child’s custodian and specifically intended to support one or more children from a dissolved relationship or marriage. Child support usually ceases when a child reaches 18. Note that neither alimony nor child support payments may be discharged in bankruptcy.