Are Maryland Alimony Payments Taxable or Deductible?

Maryland alimony payments are taxable or deductible based on one date: when the divorce or separation agreement was signed. For any agreement executed after December 31, 2018, alimony is not deductible by the payer and not taxable to the recipient, on either the federal return or the Maryland return. For agreements signed on or before that date, the older rules still govern, and the payer deducts the payments while the recipient reports them as income. Maryland does not have a separate alimony rule; it follows whatever the federal treatment produces.¹

The December 31, 2018 Cutoff

The Tax Cuts and Jobs Act of 2017 repealed the alimony deduction and the matching income inclusion for any divorce or separation instrument executed after December 31, 2018. Under the current rules, alimony works more like child support for tax purposes: the payer sends money out of after-tax income, and the recipient receives it tax-free.¹

This repeal is not one of the TCJA provisions that was set to sunset after 2025. It is permanent. A divorce finalized in 2026 or any later year falls under the same post-2018 treatment.²

How Maryland Handles It

Maryland calculates state income tax starting with your federal adjusted gross income. Because post-2018 alimony never enters federal AGI, it never appears on your Maryland return either. There is nothing extra to add back and nothing extra to subtract.

For pre-2019 agreements, the federal numbers also flow straight through. The payer’s federal deduction reduces AGI before Maryland sees it, and the recipient’s federal AGI already contains the alimony income. Maryland Form 502 picks up whatever your federal return reflects, so no separate state-level alimony adjustment is required in either direction.

What Actually Counts as Alimony

Calling a payment “alimony” in your settlement does not make it alimony for tax purposes. The IRS applies a checklist, and a payment that fails any item is treated as something else, usually a property transfer or child support.²

Payment is made in cash, check, or money order. Property transfers, debt assumptions, and in-kind use of assets do not qualify.
Payment is required by a divorce decree, separate maintenance decree, or written separation agreement.
The agreement does not designate the payment as something other than alimony.
The spouses do not file a joint return for the year.
If legally separated under a court decree, the spouses are not members of the same household when the payment is made.
The payment obligation ends at the recipient’s death. Any portion that would survive is not alimony.
The payment is not child support, and is not treated as child support because it changes based on a child-related event.

The child support line catches people most often. If a single monthly figure covers both spousal and child support, any portion that drops when a child turns 18, finishes school, or hits another milestone is reclassified as child support for the amount of the decrease.²

Modifying a Pre-2019 Agreement

If your original agreement predates 2019 and you later modify it, the old deductible-and-taxable rules normally continue. The post-2018 treatment takes over only when the modification both changes the alimony terms and expressly states that the TCJA rules apply going forward.¹

A routine adjustment to the monthly amount does not flip the tax treatment on its own. The modification document itself has to include opt-in language. If you are negotiating a change to a Maryland alimony order from 2018 or earlier, decide in advance whether to preserve the old treatment or switch, because the drafting controls the outcome.²

Reporting the Payments

Agreements Executed After 2018

Neither spouse reports the alimony. It does not appear on Form 1040, Schedule 1, or Maryland Form 502. There is no line to fill in and no attachment to prepare.³

Agreements Executed Before 2019

The payer takes the deduction on Schedule 1 (Form 1040), line 19a, and enters the recipient’s Social Security number or ITIN on line 19b and the month and year of the original agreement on line 19c. Omitting the SSN can cost a $50 penalty and disallowance of the deduction.²

The recipient reports the income on Schedule 1 (Form 1040), line 2a, and enters the date of the original agreement on line 2b.³ On Maryland Form 502, the federal AGI already reflects both sides, so no separate entry is needed.

The Recapture Rule for Pre-2019 Payers

Recapture is an anti-abuse rule that only applies to pre-2019 agreements where alimony is still deductible. It targets front-loaded payments, where a payer makes large transfers in the first year or two and then sharply cuts back, which the IRS treats as a disguised property settlement rather than ongoing support.

Recapture is triggered in the third calendar year when payments drop by more than $15,000 from the second year to the third, or when second- and third-year payments are significantly lower than the first year. When it applies, the payer adds the excess back into income in the third year, and the recipient takes a corresponding deduction.²

Three situations are carved out of the calculation:

Payments that vary because they are a fixed percentage of the payer’s business, property, or employment income, provided they continue for at least three years.
Payments that decrease because either spouse dies, or because the recipient remarries, before the end of the third year.
Payments made under a temporary support order during the divorce process. These are not counted when measuring the drop.

The payer reports recaptured alimony on Schedule 1 (Form 1040), line 2a, crossing out “received” and writing “recapture.” The recipient who previously reported that income takes the offsetting deduction on line 19a. Publication 504 contains a worksheet for the exact calculation.²

1
Internal Revenue Service. Divorce or Separation May Have an Effect on Taxes
2
Internal Revenue Service. Publication 504 – Divorced or Separated Individuals
3
Internal Revenue Service. Topic No. 452, Alimony and Separate Maintenance