Under the Internal Revenue Code (I.R.C.), an important lesson is that not all money received is taxable income. § 61 of the I.R.C. defines Gross Income as all income from whatever source derived. That is the starting point. Then there are many exceptions to the general rule. While the I.R.C. broadly defines gross income, Congress has carved out notable exceptions based on policy and fairness. Two of the most interesting exclusions are related to child support and alimony—both court-ordered payments that, under current law, are neither taxable to the recipient nor deductible by the payor.
At first glance, this may seem surprising because these payments can be substantial and recurring, yet the tax code does not treat them like wages or investment income. The reason lies in the distinct purposes each payment is intended to serve.
Child Support: Always Non-Taxable
Child support has long been excluded from gross income. The Supreme Court’s decision in Commissioner v. Lester, 366 U.S. 299 (1961), firmly distinguished child support from other marital payments. The Court explained that child support exists solely for the benefit of the child, not to enrich the receiving spouse.
Taxing child support would reduce the funds available for a child’s basic needs, such as housing, food, education, and healthcare. As a policy matter, that outcome would undermine the very purpose of child support. This concern is especially compelling given that child support awards often fall short of covering the true cost of raising a child. For that reason, child support remains classified as a personal, nondeductible expense and is excluded from the recipient’s gross income.¹
Alimony: A Shift in Policy
Alimony has had a more complicated tax history. Prior to 2019, alimony payments were taxable to the recipient and deductible by the payor, provided they met specific statutory requirements under the Internal Revenue Code.² Courts and lawmakers viewed alimony as a transfer of income from a higher-earning spouse to a lower-earning spouse, allowing the recipient to maintain a standard of living similar to that enjoyed during the marriage.
That framework changed with the Tax Cuts and Jobs Act of 2017 (TCJA). For divorce or separation instruments executed: (1) after December 31, 2018, or (2) on or before December 31, 2018, but modified after this date, alimony is no longer taxable income to the recipient and is nott deductible by the payor.³ This change was not based on a reclassification of alimony as child support. Rather, Congress became concerned that the prior tax treatment of alimony created opportunities for income shifting and inconsistent tax outcomes, as well as added administrative complexity.
By eliminating both the deduction for payors and the income inclusion for recipients, the TCJA simplified the tax treatment of alimony and increased predictability in the taxation of divorce-related payments.⁴
Although child support and alimony now share the same tax treatment, they arrive there for different reasons. Child support has always been non-taxable to protect children’s welfare. Alimony’s exclusion reflects Congress’s effort to reduce complexity and address concerns related to income shifting in divorce taxation. Together, these rules illustrate how tax law balances economic reality with social policy—and how those balances can evolve over time.
Citations
- Internal Revenue Service. (2026). Topic No. 452, Alimony and Separate Maintenance. U.S. Department of the Treasury. https://www.irs.gov/taxtopics/tc452
(explaining the tax treatment of alimony before and after the Tax Cuts and Jobs Act of 2017). - Commissioner v. Lester, 366 U.S. 299 (1961).
(holding that child support payments are not taxable income to the recipient because they are intended for the benefit of the child). - I.R.C. § 71(b) (2018) (repealed for divorce or separation instruments executed after December 31, 2018).
- Tax Cuts and Jobs Act of 2017, Pub. L. No. 115-97, § 11051, 131 Stat. 2054 (2017).
(eliminating the deduction for alimony payments and the inclusion of alimony in gross income for post-2018 instruments).