Whether alimony is taxable in Massachusetts comes down to one date. If your divorce or separation agreement was executed after December 31, 2018, alimony has no tax effect: the payer gets no deduction, and the recipient reports no income, on either the federal return or the Massachusetts return. If your agreement was executed on or before that date, the older rules still apply, and alimony remains deductible to the payer and taxable to the recipient on both returns.
Massachusetts didn’t always match the federal treatment, though. For tax years 2019 through 2021, the state kept the old rules in place even as federal law dropped them, which created a mismatch that still matters for anyone looking back at those returns.
Post-2018 Agreements: No Tax Effect
The Tax Cuts and Jobs Act of 2017 ended the federal alimony deduction and the corresponding income inclusion for any divorce or separation instrument executed after December 31, 2018.1Internal Revenue Service. Divorce or Separation May Have an Effect on Taxes The underlying statute, 26 U.S.C. § 71, was formally repealed for post-2018 instruments.
Massachusetts caught up starting with the 2022 tax year. The state updates its tax base by reference to the Internal Revenue Code as of a specific date, and in 2022 it moved that conformity date forward to January 1, 2022, picking up the TCJA alimony repeal.2Mass.gov. Alimony From 2022 forward, federal and Massachusetts treatment are aligned: a post-2018 agreement produces no deduction and no taxable income at either level.
If you’re divorcing now or your agreement was signed in 2019 or later and hasn’t been modified, you can treat alimony as tax-neutral on both returns going forward. Nothing to deduct, nothing to report.
Pre-2019 Agreements: The Old Rules Still Apply
If your divorce was finalized on or before December 31, 2018, the pre-TCJA tax treatment continues indefinitely. The payer deducts alimony and the recipient reports it as income, just as before.3Internal Revenue Service. Topic No. 452, Alimony and Separate Maintenance This is true on both your federal and Massachusetts returns, and it stays true unless you deliberately opt into the new rules through a modification.
Child support never qualifies for the alimony deduction, regardless of agreement date. If a single payment covers both alimony and child support and you pay less than what you owe, the shortfall is treated as unpaid child support first; only after child support is fully covered does any remainder count as deductible alimony.3Internal Revenue Service. Topic No. 452, Alimony and Separate Maintenance
One other wrinkle for pre-2019 agreements: the alimony recapture rule. If your deductible payments drop sharply during the first three calendar years, the IRS can require you to add some of the previously deducted amount back to your income in the third year, with the recipient getting a corresponding deduction.4Internal Revenue Service. Publication 504, Divorced or Separated Individuals The threshold involves a decrease of more than $15,000 between the second and third year, and Publication 504 walks through the calculation. It doesn’t apply when payments drop because a spouse dies, the recipient remarries before the third year ends, or the amount floats with a fixed percentage of business or employment income.
The 2019–2021 Massachusetts Gap
Here’s where returns from recent years can go wrong. Before the 2022 conformity update, Massachusetts determined taxable income by reference to the Internal Revenue Code as it existed on January 1, 2005, which still contained the old alimony deduction and income rules.2Mass.gov. Alimony For tax years 2019, 2020, and 2021, Massachusetts kept treating alimony as deductible by the payer and taxable to the recipient, even for agreements executed after 2018 that produced no federal tax effect.
So if you divorced in, say, 2020 and your alimony had zero impact on your federal return, you should still have deducted or reported it on your Massachusetts return for 2019 through 2021. People who assumed state treatment followed federal treatment during that window may have filed incorrectly. Reviewing those returns with a tax professional is worth it; incorrect filings can mean penalties or missed deductions.2Mass.gov. Alimony
From the 2022 tax year on, the mismatch is gone and the two returns move in sync.
What Happens if You Modify a Pre-2019 Agreement
Modifying an older agreement does not automatically switch the tax treatment. A modified pre-2019 agreement moves to the new tax-neutral rules only if the modification expressly states that the TCJA repeal of the alimony deduction applies.3Internal Revenue Service. Topic No. 452, Alimony and Separate Maintenance Without that specific language, you keep the old deduction-and-income treatment even after renegotiating the amount.
Whether to add that opt-in language is a math question. If the payer sits in a higher tax bracket than the recipient, the old rules often favor keeping the deduction. If the brackets are reversed, switching may let the parties restructure the payment amount so both come out ahead. Run the numbers on each person’s income before adding the opt-in to a modification.
Reporting Alimony on Your Returns
If your agreement is a post-2018 instrument and hasn’t been modified to carry opt-in language, there’s nothing to put on either return. Alimony doesn’t appear on your federal 1040 or your Massachusetts Form 1.
If your agreement is pre-2019 and still under the old rules, the payer reports the deduction on Schedule 1 (Form 1040), line 19a, and must include the recipient’s Social Security number on the return.5Internal Revenue Service. Schedule 1 (Form 1040) The recipient reports alimony income on Schedule 1, line 2a.3Internal Revenue Service. Topic No. 452, Alimony and Separate Maintenance If the recapture rule kicks in during the third year, those positions reverse: the payer reports the recaptured amount as income on line 2a, and the recipient deducts the same amount on line 19a.4Internal Revenue Service. Publication 504, Divorced or Separated Individuals
Massachusetts returns for pre-2019 agreements follow the same logic as the federal return. For the 2019–2021 period, that means Massachusetts treatment can diverge from federal treatment, and the state return is what controls on this side.
Property Transfers Are a Separate Question
Alimony tax treatment doesn’t cover property divided in the divorce. Property transfers between spouses or former spouses that are incident to a divorce produce no recognized gain or loss at the time of transfer under federal law.6Office of the Law Revision Counsel. 26 U.S. Code 1041 – Transfers of Property Between Spouses or Incident to Divorce The receiving spouse takes over the original cost basis, which means tax is deferred rather than erased. When that spouse eventually sells the property, capital gains tax is calculated from the original purchase price, not the value on the day of the divorce. Treating a property settlement as alimony to grab a deduction is precisely what the recapture rule exists to catch.