California’s New Alimony Tax Rules: What SB 711 Means for 2025 and Beyond

If you’re a Los Angeles professional — a doctor, dentist, creator, or high-net-worth individual — recent changes to California’s conformity with federal tax law may affect how alimony is taxed or deducted on your 2025 return.

With the passage of SB 711, California’s “specified conformity date” now moves up to January 1, 2025, aligning state law with many federal provisions under the Tax Cuts and Jobs Act (TCJA). One key area of change is alimony taxation — and it’s critical to understand who is affected and how these new rules apply.

What Changed Under SB 711

Starting with tax years beginning January 1, 2025, California will conform to the federal TCJA treatment of alimony — but only for certain taxpayers.

Under the new conformity:

• Alimony payments are non-deductible by the payor and excluded from the payee’s income.
• This rule applies to:
  • Divorce or separation instruments executed after December 31, 2025, or
  • Instruments executed on or before December 31, 2025 that are modified after that date, if the modification expressly states that the new rule applies.

Beginning in 2025, taxpayers will also need to report the month and year of their divorce or separation agreement on Schedule CA when filing their California tax return.

Who Is Affected

These changes primarily impact taxpayers who are divorcing or modifying existing agreements after 2025.

If your divorce or separation agreement was finalized before 2026, you’ll generally continue following pre-TCJA rules for California tax purposes.

That means:

• The payor can still deduct alimony payments on their California return.
• The payee must still report the alimony as taxable income on their California return.
• Nonresidents receiving alimony from a California resident do not owe California tax on that income, even if the payor claimed a California deduction.

Example 1 – Divorce Finalized Before 2026

A Los Angeles dentist finalized their divorce in 2024. Under the settlement, they pay $3,000 per month in alimony.

• On their 2024 and 2025 California tax returns, they can still deduct the payments.
• The ex-spouse must report the $36,000 received each year as taxable income.
• This treatment continues until the divorce agreement is modified (and only if the modification explicitly adopts the new rule).

Example 2 – Divorce Finalized After 2025

A freelance filmmaker in Los Angeles finalizes their divorce in February 2026, agreeing to pay $2,000 per month in alimony.

Under the new law:

• The payor cannot deduct the alimony payments on either federal or California returns.
• The recipient does not include the alimony as taxable income.

This aligns California’s treatment with the federal TCJA rules for new agreements.

Example 3 – Modified Agreement After 2025

A high-net-worth Amazon business owner divorced in 2022, paying $5,000 per month in deductible alimony. In 2026, the couple modifies their divorce agreement, and the new document explicitly states it follows the new TCJA-aligned rule.

From that point forward:

• The alimony is no longer deductible by the payor.
• The recipient no longer includes it as income.

If the modification does not include this clause, the old (deductible/taxable) treatment continues.

Pre-TCJA (and Pre-2026) Rules Still Apply for Older Agreements

For divorces executed before 2026 (and not modified), California continues to apply pre-TCJA law. Under those rules, alimony is deductible by the payor and taxable to the recipient — but only if all four of the following conditions are met:

1. The payment is made under a divorce or separation instrument.
2. The agreement does not specify that payments are non-deductible or non-includable.
3. The spouses are not members of the same household at the time of payment.
4. There is no obligation to make payments after the death of the payee.

If any of these conditions fail, the payments are not considered alimony and are instead treated as child support or property settlement, which are not deductible by the payor or taxable to the recipient.

Example 4 – Child Support vs. Alimony

A Los Angeles doctor pays $4,000 per month to their ex-spouse, with $2,000 explicitly designated for child support.

• The $2,000 for child support is not deductible and not taxable.
• The remaining $2,000 can qualify as deductible alimony if all four pre-TCJA conditions are met and the agreement was executed before 2026.

What Los Angeles Taxpayers Should Do Now

If you’re divorced or separated — or considering divorce — the timing and wording of your agreement will determine the tax treatment of alimony.

✔ Review your divorce or separation instrument with a qualified CPA.
✔ Confirm whether your agreement will fall under the old or new rules.
✔ If modifying an older agreement, ensure the language clearly states whether you intend to adopt the new conformity rules.
✔ Keep accurate records for both federal and California reporting.

Why It Matters for Professionals and Creators

Alimony rules can have a major impact on your taxable income, deductions, and cash flow — especially for:

• Doctors, dentists, and medical practice owners
• YouTubers, TikTokers, and online creators
• Shopify and Amazon business owners
• High-net-worth individuals and investors

Small differences in timing or document wording could mean losing or keeping thousands in deductions.

Need Expert Guidance?

At Velin & Associates, Inc., our Los Angeles CPA team specializes in helping professionals, creators, and business owners navigate complex California tax updates — including alimony treatment under SB 711.

We’ll review your current or pending divorce agreement, ensure the correct tax classification, and help you plan strategically under both federal and California law.

For more information about our services, please visit our website.

Velin & Associates, Inc

8159 Santa Monica Blvd STE 198/200 West Hollywood, CA 90046
323-902-1000
dmitriy@losangelescpa.org

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