This one is simpler than people fear. Child support is not taxed. It's not income to the parent who receives it, and it's not a deduction for the parent who pays it. That's a federal rule, so it's the same in Texas — which, as a bonus, has no state income tax at all.
For the parent receiving support
Money you receive as child support is not taxable income. You don't report it on your federal return, and it doesn't raise your tax bill. (Don't confuse this with spousal maintenance/alimony, which has its own, different rules.)
For the parent paying support
Child support is not tax-deductible. You pay it with after-tax dollars, and it doesn't lower your taxable income. This is also why the Texas guideline starts from net resources — the tax has already been accounted for before the percentage is applied.
Who claims the child as a dependent?
This is the part that actually affects your taxes — and it's separate from who pays support. By default, the custodial parent (the one the child lived with for the greater number of nights during the year) claims the child and the related tax benefits.
The noncustodial parent can claim the child only if the custodial parent signs IRS Form 8332 (Release of Claim to Exemption), and attaches it to their return. Many Texas orders specify who claims the child, sometimes alternating years.
What Form 8332 does and doesn't transfer
- Transfers to the noncustodial parent: the Child Tax Credit and Credit for Other Dependents.
- Stays with the custodial parent no matter what: the Earned Income Tax Credit, Head of Household filing status, and the Child and Dependent Care Credit.