Definition
Court-ordered or agreed payments from one former spouse to the other after a divorce or separation, also called spousal support or maintenance. The amount and duration depend on state law and the couple's finances. Under federal rules, alimony from agreements signed after 2018 is neither deductible for the payer nor taxable income for the recipient; older agreements may follow the opposite treatment.
Why it matters
Alimony is a fixed line in two budgets for years: the payer must fund it before discretionary spending, and the recipient has to plan for the date it ends. Lenders count it as a debt for the payer and, if it will continue long enough, as income for the recipient.
Example
A divorce decree orders $1,500 a month for six years. The payer budgets $18,000 a year on top of their own housing, and a lender treats the $1,500 as a monthly obligation in their debt-to-income ratio. The recipient, whose agreement was signed after 2018, receives $108,000 over the term with no federal income tax on it.
Put it into practice
Related terms
This definition is educational, not financial, legal, or tax advice. U.S. rules and limits change; verify time-sensitive details with official sources. See our disclaimer.