Once again, changes to Illinois law have and will alter how spousal maintenance awards are determined in divorce proceedings. Amendments to Sections 504 and 505 of the Illinois Marriage and Dissolution of Marriage Act, some of which became effective in 2018 and others which will be effective on January 1, 2019, come only three short years after legislators for the first time established specific formulas for calculating the amount and duration of spousal maintenance payments.
These changes tweak the calculation guidelines that were set in the last round of amendments. The 2018 changes altered the threshold for applying the guidelines and the percentages used in determining how long a spouse will be required to make maintenance payments. The 2019 changes as to how maintenance amounts will be calculated were a direct reaction to changes in federal tax law that eliminated the tax deduction for alimony payments.
Increase in Gross Income Level for Application of Guidelines
The guidelines established in 2015 only applied when the combined gross income of the parties was less than $250,000 and no multiple family situation existed. As of 2018, this formula now applies to couples with a combined gross income of less than $500,000, significantly increasing the number of divorces which will involve its use when maintenance is deemed appropriate.
Amount of Maintenance Payments
For divorces finalized on or before December 31, 2018, all amounts paid for spousal maintenance or alimony reduce the payor’s taxable income by the same sum. For most folks paying maintenance, this deduction represents a significant tax savings that can ease the burden of supporting an ex.
But the GOP tax plan passed a year ago eliminated that tax deduction for divorces finalized after the end of this year. Maintenance will no longer be deductible for the spouse who pays maintenance while the recipient can no longer include maintenance payments as taxable income. It is important to note that the deduction will still apply going forward for divorces entered this year or earlier.
In response to this significant change, Illinois modified the formula used to calculate maintenance awards. The current statutory formula provides that a maintenance award should equal 30 percent of the payor’s gross income, minus 20 percent of the payee’s gross income.
Example:
- Husband’s annual gross income = $100,000 (30% = $30,000)
- Wife’s annual gross income = $45,000 (20% = $9,000)
- $30,000 – $9,000 = $21,000 in annual spousal maintenance to wife.
The amount calculated as maintenance, however, when added to the gross income of the payee, may not result in the payee receiving an amount that is more than 40% of the combined gross income of the parties.
For divorces finalized in 2019 or later, those guidelines are now as follows:
- The award should be 33.3% of the payor’s net (not gross) income, minus 25% of the recipient’s net (not gross) income.
- There will still be a 40% cap, but it will now be calculated using the combined net income of the parties rather than gross income.
Duration of Maintenance Payments
Under both the old and new laws, how long a spouse is required to pay maintenance is based on the length of the marriage. Before 2018, judges were to use the following formula in determining how long payments must continue:
- Married 0 – 5 years = 20% of the duration of the marriage
- Married 5 – 10 years = 40% of the duration of the marriage
- Married 10 – 15 years = 60% of the duration of the marriage
- Married 15 – 20 years = 80% of the duration of the marriage
- 20 or more years = court has the discretion to order either permanent maintenance or maintenance equal to the length of the marriage.
Under this formula, for example, a 5-year marriage would result in a 1-year maintenance obligation, while a 10-year marriage would result in 4 years of maintenance payments.
The new formulas are broken down in more detail such that the percentages that apply to an 11-year marriage, for example, are now different than they are for a 14-year one. Specifically, the duration of maintenance obligations are now as follows:
- less than 5 years (.20)
- 5 years or more but less than 6 years (.24)
- 6 years or more but less than 7 years (.28)
- 7 years or more but less than 8 years (.32)
- 8 years or more but less than 9 years (.36)
- 9 years or more but less than 10 years (.40)
- 10 years or more but less than 11 years (.44)
- 11 years or more but less than 12 years (.48)
- 12 years or more but less than 13 years (.52)
- 13 years or more but less than 14 years (.56)
- 14 years or more but less than 15 years (.60)
- 15 years or more but less than 16 years (.64)
- 16 years or more but less than 17 years (.68)
- 17 years or more but less than 18 years (.72)
- 18 years or more but less than 19 years (.76)
- 19 years or more but less than 20 years (.80)
For a marriage of 20 or more years, a judge has the discretion to order maintenance for a period equal to the length of the marriage or for an indefinite term.
Judge May Deviate From Guidelines But Must Explain Why
While a judge is not required to follow the new guidelines, if they deviate from them they must explicitly state in their findings the amount of maintenance or duration that would have been required under the guidelines and the reasoning for any variance from the guidelines.
If you have questions or concerns regarding these changes or spousal maintenance generally, please give me a call at (312) 236-2433 or fill out my online form to arrange for a consultation.
