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Quick Answer:

Is alimony taxable in Pennsylvania?

Before January 1, 2019, alimony payments were taxable to the recipient and deductible for the party paying the alimony. As of that date, alimony payments are neither taxable nor deductible. In negotiating alimony in divorces, It is important now that the parties keep in mind that alimony no longer has any tax consequences for either party.

Divorces with alimony concluded before January 1, 2019 were subject to the former rule of the alimony payments being taxable to the party receiving the alimony and deductible for the party paying alimony. From that date forward, the rule has changed and alimony payments are no longer taxable for the recipient nor deductible for the person making the payments. As a practical matter, either when the parties were negotiating the amount of alimony or the Court was deciding how much it would order to be paid (in an expensive, contested divorce), the “net amount”, before and after taxes played a part. If more had to be paid to make up for the recipient’s tax consequences, it could be viewed as somewhat fair because the paying party could take the tax deduction on the otherwise larger amount. Now that the tax consequences are no longer a valid consideration for either party, the amount of an alimony payment, all other things being equal, could be somewhat less with each party realizing the same net gain or loss.