Beginning January 1, 2026, new spousal support orders will no longer be taxable or tax deductible for California state tax purposes.
California is joining the vast majority of states by aligning its tax treatment of spousal support with federal tax law.
California has been one of the few states still allowing spousal support payors to take a tax deduction for state income tax purposes. But with the passage of Senate Bill 711 (SB 711) on October 1, 2025, California will now conform to the federal tax treatment of spousal support (alimony) established under the Tax Cuts and Jobs Act (TCJA).
Alimony will no longer be deductible by the payor for state or federal taxes, and the recipient will not pay taxes on spousal support income.
The reason for the new bill is to simplify the preparation of California income tax returns, the filing process for taxpayers, and the administration of California income tax laws.
While this eliminates confusion between state and federal law, it also changes the financial dynamics of divorce settlement negotiations. For family law professionals advising clients, anyone paying or receiving spousal support in California, this change is important.
Here’s what everyone needs to know about how alimony taxation has evolved, what’s changing in California for 2026, and what this means for clients and family law professionals moving forward.
2019–2025: Federal vs. California Taxation Laws
The TCJA eliminated the deduction for federal taxes for any spousal support order entered on or after January 1, 2019:
- Payers could no longer deduct spousal support payments at the federal level.
- Recipients no longer reported spousal support as income at the federal level.
But California did not conform to the federal standard for state income taxes. Payers could still deduct support on their California state income tax returns, and recipients had to report spousal support payments as income.
For divorce practitioners and tax planners, this dual tax system complicated tax advice and negotiations. Clients were often confused when told alimony was still deductible for California but not for Federal taxes. Tax professionals and lawyers had to manage client expectations around differing after-tax cash flow outcomes.
2026: What SB 711 Changes for California
Starting January 1, 2026, SB 711 makes California fully mirror federal law. For new support orders and judgments:
- Spousal support payments will no longer be deductible for state income tax purposes.
- Recipients will no longer report spousal support as taxable income on state returns.
However, existing agreements finalized before January 1, 2026, will continue to follow the old tax rules, unless the parties mutually agree to adopt the new system and clearly state that choice in a modified judgment.
Key Takeaways for Family Law Practitioners
As the new rule takes effect, attorneys will play an essential role in helping clients understand the implications, adjust expectations, and negotiate equitable outcomes under a more straightforward tax framework.
Here are some of the implications:
- At a given level of income and spousal support, the payer’s taxes will tend to be higher than before, because the payer will lose the California state income tax deduction.
- By the same token, the recipient’s taxes will tend to be lower than before, because spousal support income will now be tax-free in California.
- To take one example: if the payer earns $200,000 per year and the recipient earns $25,000, the payer’s state tax goes from $15,359 in the current system to $17,383, when spousal support is no longer deductible, a difference of almost $2,000 per year. In this case, the recipient’s tax was $0 before and remains $0 after.
- In this case, and often, there will be a net increase in tax paid to the state. Sometimes there will be no net change. But there will never be a net decrease in combined tax paid.
- At a given level of spousal support, the net effect will be to lower the payer’s after-tax income and raise the recipient’s after-tax income.
- Because of these effects, calculated spousal support amounts will be lower.
- Using the example above, spousal support will now decrease from $1,813 to $1,675, a reduction of $138 or about 8%.
How do I adjust Family Law Software to reflect the new tax rules?
Family Law Software is currently programmed to make the switch automatically on January 1, 2026.
In the meantime, users can apply the new tax rule by simply checking the tax option shown below:
California Spousal Support in Family Law Software
While tax treatment of alimony has been clarified, there is no single statutory formula for spousal support.
California courts use a formula to determine temporary spousal support, commonly calculated as 40% of the higher earner’s net income minus 50% of the lower earner’s net income.
The percentages used will vary depending on the county, or users may choose any percent for negotiation purposes.
When making the final decision on spousal support, a judge may also weigh statutory factors like the duration of the marriage, the spouses’ earning potential, health, and the standard of living established during the marriage.
For these situations, you may wish to use the Family Law Software Spousal Support Calculator. It starts with the common percentage-based calculation and then gives users the flexibility to increase or decrease the support amount by considering the important statutory factors that courts use.
Family Law Software remains the most comprehensive and accurate solution for California family law practitioners.
Currently, there are only six child support calculators certified for use in California courts.
Family Law Software is the ONLY Cloud-based program to calculate California child and spousal support, calculate tax impacts of divorce, divide property, and quickly generate compelling financial analyses.
Our team continuously monitors and incorporates changes in laws and tax codes to ensure accuracy and reliability for all users. All Family Law Software users now have access to our Cloud portal providing on-demand access to the most current version of our software.
Firms utilizing the desktop version must install the latest update to access recent enhancements. If you would like to transition your team to the Cloud platform, please visit our accounts page.
Helpful Resources:
California Judicial Council approved child support calculators: https://courts.ca.gov/programs-initiatives/families-and-children/family-law/ab-1058-child-support-program/guideline
Tax Updates for 2025: https://www.familylawsoftware.com/tax-updates-for-2025/
Contact Us: Family Law Software: https://site.familylawsoftware.com/contact/