Illinois Adjusts Spousal Maintenance Law Ahead of New Year

 Posted on August 27, 2018 in Alimony / Maintenance

Since the U.S. Congress eliminated the alimony tax deduction, divorce professionals have waited to see how state governments will respond. People paying spousal maintenance will not be allowed to deduct their payments from their federal income taxes if the divorce agreement is approved after Dec. 31, 2018. Recipients will also not claim their payments as taxable income. The new law shifts the financial burden towards the paying spouse, and divorce professionals expect courts to react by awarding less in spousal maintenance. Illinois recently approved a new law that changes its directions to courts on how they should evaluate whether to award spousal maintenance and what the maintenance amount should be.

Deciding on Maintenance

The maintenance section of the Illinois Marriage and Dissolution of Marriage Act contains a list of relevant factors that a court must consider when determining whether awarding spousal maintenance is appropriate. The list instructed the court to consider “the tax implications of the property division upon the respective economic circumstances of the parties.” Lawmakers amended the section to simply state that the court should consider “the tax consequences to each party.” The amendment broadens the definition of what courts may consider in relation to taxes, which includes how not having the alimony tax deduction will affect the paying party.

Maintenance Formula

The new law also amends the formula that courts are advised to use when calculating spousal maintenance. The law now states that:

• The maintenance amount should equal 33 ⅓ percent of the payer’s net income, subtracted by 25 percent of the recipient’s net income; and
• The net income of the recipient, including the maintenance payments, shall not exceed 40 percent of the combined net incomes of the two parties.

The law increases the percentage of the parties’ incomes used in the formula, though the 40 percent cap remains the same. The law also changes to using net income instead of gross income, which will lower the income amounts used in the formula.

Impact of the Law

Illinois’ amended spousal maintenance law goes into effect on Jan. 1, 2019, meaning that spousal maintenance agreements that are approved before the end of the year will use the old law. How the changes in the law will affect your spousal maintenance agreement depends on the income disparity between yourself and your spouse. You can forgo the state’s spousal maintenance formula by agreeing between each other on an amount. A Kane County divorce attorney at Goostree Law Group can advise you on your best options in regards to spousal maintenance. To schedule a free consultation, call 630-584-4800.

Source:

http://www.ilga.gov/legislation/fulltext.asp?DocName=10000SB2289sam001&GA=100&SessionId=91&DocTypeId=SB&LegID=108578&DocNum=2289&GAID=14&Session=