This report, distributed by Fernandez Law Group, examines two California family law changes effective January 1, 2026, including a tax change with particular relevance to high-net-worth spousal support cases.
Senate Bill 711, signed into law October 1, 2025, and chaptered as Chapter 231 of the Statutes of 2025, conforms California's state tax treatment of spousal support to federal rules established under the Tax Cuts and Jobs Act of 2017. For spousal support agreements executed on or after January 1, 2026, payments are no longer deductible by the paying spouse or taxable to the receiving spouse, for both California state and federal tax purposes.
Before SB 711, California was among a small number of states that had not conformed to the federal tax treatment adopted in 2019, meaning spousal support payors could still deduct payments on their state return even though the federal deduction had already been eliminated. According to a bill analysis from the California Franchise Tax Board, the legislation was intended to simplify California income tax preparation and reduce confusion between state and federal filings.
The elimination of the state deduction is expected to affect higher-income cases most, where the dollar value of spousal support payments, and the associated tax savings, tend to be greatest. Settlement negotiations calculated under the prior tax treatment may no longer reflect the actual after-tax cost of a proposed support amount.
The change generally applies to agreements executed on or after January 1, 2026, or to earlier agreements modified after that date if the modification expressly adopts the new tax treatment. Agreements finalized before the effective date generally continue to follow the prior tax rules absent such a modification.
Separately, Senate Bill 1427, approved by the governor in 2024 and effective January 1, 2026, created a new joint petition process for spouses or domestic partners who do not qualify for the state's more limited summary dissolution procedure. Under the new process, both parties are identified as Petitioner 1 and Petitioner 2 rather than as petitioner and respondent, and the joint filing does not require formal service of the petition or the filing of a separate response.
Both spouses must still agree on the underlying terms of their case before filing jointly, since the process is designed for couples who have already reached agreement rather than those with contested issues.
California remains a community property state, meaning assets and debts acquired during a marriage are generally divided between spouses, while property acquired before marriage or through inheritance is typically treated as separate property. In cases involving significant assets, such as business interests or investment portfolios, characterizing and valuing property can require substantially more analysis than in a typical case.
Family Code Section 4320 continues to govern long-term spousal support determinations, requiring courts to weigh statutory factors rather than apply a fixed formula, including the length of the marriage, each spouse's earning capacity, and the standard of living established during the marriage.
The legislative information referenced in this release is based on the official text and legislative history of Senate Bill 711 and Senate Bill 1427, along with guidance from the California Franchise Tax Board. The provisions described are presented for general public awareness and are not a substitute for individualized legal advice.
Fernandez Law Group represents clients in family law matters in Santa Monica and throughout Los Angeles County, including high-net-worth and complex property division cases.
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