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California’s SB 711 Brings Major Alimony Tax Changes Starting in 2025

  • Writer: Viktoriya Barsukova, EA, MBA
    Viktoriya Barsukova, EA, MBA
  • 4 days ago
  • 2 min read

California has enacted SB 711, updating its conformity date to January 1, 2025, and partially aligning state law with the federal Tax Cuts and Jobs Act (TCJA). Beginning with the 2025 tax year, California will adopt the TCJA treatment of alimony—but only for certain taxpayers.


New Rules for Post-2025 Divorce and Separation Agreements


Under SB 711, alimony payments will be non-deductible for the payor and excluded from the payee’s income, mirroring federal law. However, this treatment applies only to:


  • Divorce or separation instruments executed after December 31, 2025, or

  • Instruments executed on or before December 31, 2025, but modified after that date if the modification explicitly states that the new conformity provision applies.


Taxpayers will now be required to report the month and year of their divorce or separation agreement on Schedule CA.


Transitional Treatment for Pre-2026 Agreements


For divorce or separation agreements executed before 2026 (and not modified to adopt the new law), California will continue following pre-TCJA rules.


  • The payor may still deduct alimony payments on their California return.

  • Resident payees must continue to report alimony received as income on their California return.

  • Non-resident payees, however, will not be taxed by California on alimony received, even if the payor claims the deduction on a California return.



Importance of Reviewing Divorce Instruments


Tax professionals must carefully examine their clients’ divorce or separation documents to determine the correct tax treatment. The execution or modification date of the agreement will be key to deciding whether the old or new rules apply.


Pre-TCJA Deductibility Rules


For instruments governed by pre-TCJA law, alimony remains deductible only if all four of these requirements are met:


  1. The payment is received by a spouse under a divorce or separation instrument.

  2. The instrument does not designate the payment as non-deductible or non-includable in income.

  3. The spouses are not members of the same household when the payment is made.

  4. There is no liability to make any payment after the death of the payee spouse, nor any substitute payments after death.


If any of these conditions fail, the payment is not alimony. Additionally, child support—or payments fixed as child support—is never deductible by the payor or taxable to the recipient. The taxpayers’ intent does not control; the determination depends solely on these objective tests.


Looking Ahead

"California’s SB 711 Brings Major Alimony Tax Changes Starting in 2025"

These changes will create a split system for several years, as pre-2026 agreements continue under old law while post-2025 agreements fall under the new conformity rules. Practitioners must stay alert when preparing returns and verifying document dates.


For detailed guidance, Spidell’s Analysis and Explanation of California Taxes is being updated to include the 2025 law changes, including SB 711.


California’s SB 711 Brings Major Alimony Tax Changes Starting in 2025



 
 
 

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