Casner & Edwards

Client Alert: Legislative Updates on the Horizon to Address New Alimony Tax Law

By: Family Law Group

Addressing appropriate financial support for a former spouse can be one of the more challenging issues to resolve during a divorce.  The guiding principles for determining what spousal support should be are: (1) the recipient’s need for support and (2) the payor’s ability to pay.  In Massachusetts, the alimony statute, Massachusetts General Laws, Chapter 208, Section 53[1], sets a default range for spousal support orders of 30-35% of the difference between spouses’ respective incomes.  This percentage range has historically assisted parties in resolving disputes about support by providing generally accepted bounds and certainty to an otherwise discretionary award.

This system was upset, however, by the passage of the Tax Cuts and Jobs Act of 2018 (“the Act”).  The Act eliminates the tax deductibility of alimony payments by the payor.  With alimony now neither deductible nor includable, the percentages laid out by the Massachusetts Legislature have been called into question.  This has resulted in a period of uncertainty for divorcing parties, and prompted action by the Massachusetts Bar Association to seek legislation that would amend the Massachusetts Alimony Laws.  Massachusetts Lawyers Weekly recently reported that, based on input from a certified public accountant at the urging of the Family Law Joint Legislative Task Force, a proposal has been made to amend the default percentage range to 23-28%, which range is intended to approximate the after-tax implications of the historic 30-35% orders.

While such a change would not serve to alter the underlying principle behind spousal support, it would be an important step forward to bring the Massachusetts Alimony Laws in alignment with current federal tax treatment.

Until legislation is adopted, uncertainly continues for litigants in crafting support awards.  Each case remains unique and consulting with an experienced attorney is recommended in addressing these issues.

[1] G.L. c. 208, § 53 (b) provides that: “the amount of alimony should generally not exceed the recipient's need or 30 to 35 per cent of the difference between the parties' gross incomes established at the time of the order being issued.”

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